KIM R. GIBSON, District Judge.
Presently before the Court is (1) an emergency motion for appointment of a receiver (ECF No. 3), filed by Plaintiff Manufacturers and Traders Trust Company ("M & T Bank"), and (2) Defendants' motions in response to Plaintiffs complaint (ECF No. 8), filed by Minuteman Spill Response, Inc., B3 Management, L.P., BPK Holdings, LLC, Everest Aviation, LLC, BPK Captive, Inc., Double B Realty, and Minuteman Towing, Inc. (collectively, "Minuteman"). M & T Bank seeks an accounting and a court-appointed receiver to take control of Minuteman's business operations. In response, Minuteman requests that this case be transferred to the Middle District of Pennsylvania. Alternatively, Minuteman argues that the complaint must be dismissed for failure to join a necessary party and for failure to state a claim. For the reasons that follow, the Court will
The Court exercises diversity jurisdiction under 28 U.S.C. § 1332(a) because the amount in controversy exceeds $75,000, exclusive of interests and costs, and the suit is between citizens of different states. M & T Bank is a corporation with its principal place of business at One M & T Plaza, Buffalo, New York. Each of the Defendants has a principal place of business in Pennsylvania. Because the parties disagree on proper venue, the Court will address that issue in more detail below.
This case involves a dispute between a bank lender and its business borrowers. The companies listed in the caption are part of a business enterprise that, among other things, provides services and equipment for the natural gas industry. (ECF No. 14, Hr'g Tr. vol. 1 at 17:8-17). Brian J. Bolus directly or indirectly owns or controls all of the Defendants, including the two operating businesses—Minuteman Spill Response, Inc., and Minuteman Towing, Inc.—and the remaining ancillary entities that hold real property and other assets for the operating businesses. (ECF No. 1, Compl. ¶¶ 310; ECF No. 8-1 at 1; ECF No. 14, Hr'g Tr. vol. 1 at 18:619:8).
As set forth in the complaint and its exhibits,
As of July 30, 2013, Minuteman owed M & T Bank approximately $12,700,000. (Compl. ¶ 33). The total amount owed changes daily.
The dispute in this case began when M & T Bank learned of the Commonwealth of Pennsylvania's ("Commonwealth") pending criminal investigation of Minuteman. On May 29, 2013, the Pennsylvania Office of the Attorney General ("Attorney General") served a warrant on M & T Bank, authorizing the search and seizure of all bank accounts and financial products in possession of M & T Bank relating to Minuteman or to Brian J. Bolus and his family. (Compl. ¶ 34; ECF No. 3 ¶ 4). The Commonwealth also seized most of Minuteman's business assets and records. (Compl. ¶ 35; ECF No. 10 ¶ 7).
Since the seizure, a substantial portion of the Minuteman funds at M & T Bank remain sequestered under court order. (Compl. ¶ 38). M & T Bank avers that, despite repeated requests, Minuteman has refused to provide sufficient financial information from which M & T can assess the viability of Minuteman's business operations. (Id. ¶ 41). M & T further avers that Minuteman has impeded M & T Bank's efforts to appraise its collateral; that Minuteman has been liquidating assets at "fire sale prices"; and that Minuteman is in "payment default, among other defaults." (Id. ¶¶ 37, 41, 43). Given the actions of the Attorney General, "the existing defaults," the lack of "adequate protection of M & T Bank's collateral interests," among other reasons, M & T has filed suit requesting a court-appointed receiver and an accounting. (Id. ¶ 43).
Aside from asserting equitable grounds to justify the appointment of a receiver, M & T Bank avers that Minuteman has contractually authorized and consented to a receiver under the pertinent mortgage documents. (Id. ¶ 47). According to M & T Bank, the MSR/B3 Security Agreement and the BPK Security Agreement also provide contractual grounds for a receiver. (Id. ¶ 49).
M & T Bank filed a complaint on August 8, 2013, and an emergency motion for appointment of a receiver (ECF No. 3) the next day. On September 3, 2013, Minuteman responded to the complaint by filing a motion to transfer venue to the Middle District of Pennsylvania, a motion to dismiss for failure to join a necessary party, and a motion to dismiss for failure to state a claim. (See ECF No. 8). These motions have been fully briefed and are ripe for disposition. On September 19, 2013 and October 8, 2013, the Court held a hearing on the motion for appointment of a receiver, where the parties presented extensive evidence and testimony.
Before addressing the merits of M & T Bank's request for a receiver, the Court must determine whether venue should be transferred to the Middle District of Pennsylvania. The Court must also determine whether M & T Bank's complaint must be dismissed for failure to join a necessary party or for failure to state a claim.
Minuteman seeks to transfer this matter to the Middle District of Pennsylvania under 28 U.S.C. § 1404(a). The issue is not whether venue is proper in this judicial district but whether it is in the "interest of justice" to transfer the matter elsewhere. See 28 U.S.C. § 1404(a). Minuteman argues that M & T Bank's principal place of business is in Buffalo, New York, and that M & T Bank has a major office in Harrisburg, Pennsylvania. Minuteman further argues that each of the Defendants has a registered office and headquarters in the Middle District; that all of the mortgaged properties are located in the Middle District; and that a receiver, if appointed, would be dealing with assets located in the Middle District. (ECF No. 8-1 at 9; ECF No. 15-2 at 3-4). On the other hand, M & T Bank argues that venue is proper in the Western District because, under certain loan documents, Minuteman has consented to venue in "any judicial district [in Pennsylvania] where [M & T Bank] has a branch." (ECF No. 13 at 23) (citations omitted).
Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought . . ." 28 U.S.C. § 1404. In determining whether to grant a motion to change venue, a district court is ordinarily "vested with wide discretion," Plum Tree, Inc. v. Stockment, 488 F.2d 754, 756 (3d Cir. 1973), and must weigh all relevant factors bearing on whether the litigation "would more conveniently proceed and the interests of justice be better served by transfer to a different forum." Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995). The moving party bears the burden of establishing that a change of venue is warranted, and a plaintiffs "choice of a proper forum is a paramount consideration in any determination of a transfer request." Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir.1970).
In this case, several loan documents between Minuteman and M & T Bank contain the following forum selection clause:
(ECF No. 13 at 2) (citations omitted and emphasis in original). As the U.S. Supreme Court recently explained, "[t]he presence of a valid forum-selection clause requires district courts to adjust their usual § 1404(a) analysis . . ." Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, ___ U.S. ___, 134 S.Ct. 568, 581, 187 L.Ed.2d 487 (2013). It is clear that "[o]nly under extraordinary circumstances" should a district court not enforce a valid forum selection clause. Id. Furthermore, in determining the proper forum, a district court should not consider the private interests of the parties: "When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation." Id.
Transferring this matter to the Middle District does not serve the interests of justice. Minuteman claims that a forum selection clause is just "one relevant factor" that this Court should consider in determining a transfer request. (ECF No. 8-1 at 8). Minuteman also points to certain factors that allegedly weigh in favor of changing venue, including (1) the location of the Minuteman businesses; (2) the location of the mortgaged properties; and (3) the fact that many business dealings between the parties occurred in the Middle District. (See id. at 9; ECF No. 15-2 at 3). According to recent Supreme Court jurisprudence, however, all of these considerations are irrelevant.
In this case, M & T Bank chose to file suit in this district, and the parties contractually agreed to venue in any judicial district where M & T Bank has an office, including the Western District of Pennsylvania. Minuteman does not argue that the forum selection agreement was the result of fraud, nor has it shown that enforcing the agreement would violate public policy or seriously inconvenience the parties. See MoneyGram Payment Sys., Inc. v. Consorcio Oriental, S.A., 65 Fed.Appx. 844, 846 (3d Cir.2003) (citations omitted) (discussing grounds for invalidating a forum selection clause). The fact that Minuteman freely consented to venue in this district—along with the fact that there are no public interest factors weighing in favor of a transfer of venue—leads this Court to conclude that the parties should remain bound by their agreement. The Court will thus
Minuteman also moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(7) for failure to join a necessary party. Minuteman argues that the Commonwealth is a necessary party based on Federal Rule of Civil Procedure 19(a)(1)(A) because "all actions that would be taken by a potential receiver would have to include the involvement, and possible approval, of the Commonwealth." (ECF No. 15-2 at 5).
In reviewing a Rule 12(b)(7) motion to dismiss, a district court "must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the non-moving party." Pittsburgh Logistics Sys., Inc. v. C.R. England, Inc., 669 F.Supp.2d 613, 618 (W.D.Pa.2009) (citing Jurimex Kommerz Transit G.M.B.H. v. Case Corp., 65 Fed.Appx. 803, 805 (3d Cir.2003)). Evidence outside the pleadings may be considered. See Cummings v. Allstate Ins. Co., CIV.A. 11-02691, 2011 WL 6779321, at *3 (E.D.Pa. Dec. 27, 2011) (citations omitted).
To prevail on a Rule 12(b)(7) motion, the movant must show that the plaintiff has failed to join a party under Federal Rule of Civil Procedure 19. See Gen. Refractories Co. v. First State Ins. Co., 500 F.3d 306, 312 (3d Cir.2007). Rule 19 states in material part:
Fed.R.Civ.P. 19(a)(1) (emphasis added). Although a party may be deemed necessary under clause (A) or clause (B) of Rule 19(a)(1), Gen. Refractories Co., 500 F.3d at 312, Minuteman solely argues that the Commonwealth must be joined as a party under clause (A). (ECF No. 8-1 at 11; ECF No. 15-2 at 5).
Under clause (A) of Rule 19(a)(1), a district court must determine whether it "can grant complete relief to persons already named as parties to the action; what effect a decision may have on absent parties is immaterial." Gen. Refractories Co., 500 F.3d at 313 (emphasis in original) (citing Angst v. Royal Maccabees Life Ins. Co., 77 F.3d 701, 705 (3d Cir. 1996)).
The Court's inquiry is whether it can accord meaningful relief to the parties absent joinder of the Commonwealth. The Court answers this question in the affirmative because the Commonwealth is not necessary in resolving the instant dispute. As Minuteman points out, a court-appointed receiver would face unusual challenges because the Commonwealth has seized most of Minuteman's financial accounts. Nevertheless, the Court can order an accounting
Minuteman argues that the Commonwealth is a necessary party under Rule 19(a)(1)(A) because a receiver could not act without the Commonwealth's approval. (ECF No. 15-2 at 5). Minuteman further argues, "[N]either [M & T] Bank, nor any receiver that might be appointed, can operate without being substantially affected by the actions of the Commonwealth." (ECF No. 8-1 at 12). Finally, Minuteman asserts, "[T]he sweepingly broad powers that [M & T] Bank requests the receiver be granted would run counter to the [Commonwealth's] interests." (Id.). These arguments are unpersuasive because they have no bearing on the Court's present inquiry. The Court can appoint a receiver without the Commonwealth being joined as a party, and the fact that the Attorney General has already consented to the proposed order appointing a receiver corroborates this finding. (See ECF No. 11-1). The Court will therefore
Minuteman next asserts that M & T Bank's complaint must be dismissed for failure to state a claim. First, Minuteman argues that the Court cannot appoint a receiver because a receiver is the sole remedy requested. (ECF No. 8-1 at 17). Second, Minuteman argues that M & T Bank has failed to plead facts showing irreparable harm. (Id.). Third, Minuteman argues that M & T Bank has failed to plead facts showing "wrongdoing, fraud, waste, mismanagement or dissipation" of assets. (Id.). The Court will first provide the relevant legal standards before addressing each of these arguments.
The Federal Rules of Civil Procedure require that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8(a)(2). Federal Rule of Civil Procedure 12(b)(6) allows a party to seek dismissal of a complaint or portion of a complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Although the federal pleading standard has been "in the forefront of jurisprudence in recent years," Fowler v. UPMC Shadyside, 578 F.3d 203, 209 (3d Cir.2009), the standard of review under Rule 12(b)(6) is now familiar.
In determining the sufficiency of the complaint under Rule 12(b)(6), a district court must conduct a two-part analysis. First, the court must separate the factual matters averred from the legal conclusions asserted. See Fowler, 578 F.3d at 210. Second, the court must determine whether the factual matters averred are sufficient to show that the plaintiff has a "plausible claim for relief." Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). The complaint need not include "detailed factual allegations." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Moreover, the court must construe the alleged facts, and draw all inferences gleaned therefrom, in the light most favorable to the non-moving party. See id. at 228. Nevertheless, "[t]hreadbare recitals of the elements of a cause of action" do not suffice. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Rather, a complaint must present sufficient "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Sheridan v. NGK Metals Corp., 609 F.3d 239, 263 n. 27
The parties disagree as to whether Pennsylvania or federal law applies to the decision to appoint a receiver. Neither party, however, has argued that any material difference might arise if the Court applies federal or Pennsylvania law. (See ECF Nos. 8, 13, 15-2, 22, 24, 26). In federal diversity cases, "[i]f the matter is procedural, and an applicable federal statute, rule, or policy exists, then federal procedural law applies; if the matter is substantive, the court must apply the substantive law of the forum state." Chin v. Chrysler LLC, 538 F.3d 272, 278 (3d Cir. 2008). Federal Rule of Civil Procedure 66 addresses receivers in federal court:
Fed.R.Civ.P. 66. The Court will thus apply federal law in this matter, although the decision to appoint a receiver rests within the sound discretion of the trial court regardless of whether Pennsylvania or federal law applies. See Comerica Bank v. State Petroleum Distributors, Inc., 3:08-CV-678, 2008 WL 2550553, at *3 (M.D.Pa. June 2, 2008).
A receivership is an extraordinary remedy that is justified in extreme situations. See, e.g., Mintzer v. Arthur L. Wright & Co., 263 F.2d 823, 824 (3d Cir. 1959) (describing a court-appointed receiver as "an equitable remedy of rather drastic nature"). Because a receiver "unquestionably interfere[s]" with an individual's right to otherwise control his or her property, see Mintzer, 263 F.2d at 825, a district court should appoint a receiver only "in cases of necessity, and when the plaintiff clearly and satisfactorily shows that an emergency exists and the receiver is needed to protect the property interests of the plaintiff." Comerica Bank, 2008 WL 2550553 at *4; accord Miller v. Fisco, Inc., 376 F.Supp. 468, 470 (E.D.Pa.1974).
Pertinent case law indicates that various extraordinary circumstances can justify a court-appointed receiver. Although there is no precise formula for determining whether a receiver should be appointed, a federal district court may consider the following equitable factors:
Comerica Bank, 2008 WL 2550553 at *4 (citations omitted); accord Rumbaugh v. Beck, 491 F.Supp. 511, 520 (E.D.Pa.1980), aff'd, 636 F.2d 1210 (3d Cir.1980).
M & T Bank has pled sufficient facts showing a "plausible claim for relief." See Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). After construing the alleged facts and drawing all reasonable inferences in favor of M & T Bank, the Court finds that there are sufficiently pleaded facts to show that equity plausibly favors a receiver in this case.
M & T Bank avers that the Commonwealth has seized the assets and financial accounts of Minuteman, causing severe harm to the business operations. (Compl. ¶¶ 34-36). M & T Bank further avers:
(See id. ¶¶ 4143). These averments show that there is a reasonable possibility of imminent danger to M & T Bank's collateral, inadequate security to satisfy Minuteman's debt, and wrongful conduct that could frustrate M & T Bank's efforts to secure its collateral. The alleged facts in the complaint do not overwhelmingly support a receiver in this matter, but the complaint is nonetheless sufficient to withstand a Rule 12(b)(6) challenge.
M & T Bank also raises contractual grounds for a receiver. (Compl. ¶¶ 48-49). Minuteman does not address these contractual provisions in its motion to dismiss. Given that the complaint alleges sufficient facts to plausibly justify a court-appointed receiver on equitable grounds, the Court need not address these contractual provisions at this time.
Minuteman argues that the Court cannot appoint a receiver absent some "recognized presently existing right" and that a receiver cannot be the "sole remedy" that M & T Bank requests. (ECF No. 8-1 at 17). Minuteman incorrectly cites Pennsylvania law for this proposition. Moreover,
Minuteman raises an interesting argument as to whether this Court can appoint a receiver when M & T Bank requests no other immediate relief other than a receiver and an incidental accounting. "A receivership is only a means to reach some legitimate end sought through the exercise of the power of a court of equity. It is not an end in itself." Gordon v. Washington, 295 U.S. 30, 37, 55 S.Ct. 584, 79 L.Ed. 1282 (1935). Thus, a federal court sitting in equity cannot appoint a receiver "where the appointment is not ancillary to some form of final relief." Id. at 38, 55 S.Ct. 584. The classic example in which a receiver is incidental to a form of final relief is when a court appoints a receiver to manage mortgaged property for its protection and conservation pending a foreclosure. Id. at 37, 55 S.Ct. 584.
Here, M & T Bank asks not simply that a receiver be appointed to manage the business assets and operations but that a receiver "determine the best method of satisfying the obligations owed to M & T Bank, including, but not limited to, liquidating assets." (Compl. at 18). Although a party may not bring a "naked action for a receiver in the absence of some path to further, final relief," a federal court's equitable power to appoint a receiver extends to such situations where "an explicitly stated and contemplated end of the receivership is the sale of the properties." U.S. Bank Nat'l Ass'n v. Nesbitt Bellevue Prop. LLC, 866 F.Supp.2d 247, 257 (S.D.N.Y. 2012). M & T Bank seeks a receiver to protect and conserve its collateral after Minuteman defaulted on loans. Because M & T's complaint explicitly contemplates liquidation of Minuteman assets, the Court finds that it can assert its equitable powers to appoint a receiver absent any other relief immediately sought.
Minuteman next argues that M & T Bank has failed to plead any facts showing irreparable harm. (ECF No. 8-1 at 17).
Finally, Minuteman argues that M & T Bank has failed to plead sufficient facts showing wrongdoing, fraud, waste, mismanagement, or dissipation of assets. (ECF No. 8-1 at 17). Minuteman incorrectly cites Pennsylvania law to support this argument, and, although these factors are relevant considerations, there are other relevant factors at issue. As well, the averments in the complaint do suggest the possibility of either wrongdoing or gross mismanagement by corporate officers. The fact that the Attorney General executed a warrant to seize Minuteman's financial accounts also substantiates this view. After construing the alleged facts and drawing all reasonable inferences in favor of M & T Bank, the Court finds that M & T Bank has pleaded sufficient facts to justify a court-appointed receiver. The Court will
The Court will now address the merits of M & T Bank's motion for a court-appointed receiver (ECF No. 3). As previously noted, on September 19, 2013 and October 8, 2013, the Court held a hearing on this motion. Below is an overview of the arguments and the Court's findings of fact and conclusions of law.
M & T Bank argues that equity demands the immediate appointment of a receiver. In support of this argument, M & T Bank claims that
Additionally, M & T Bank asserts contractual grounds for a receiver. Under certain loan documents, Minuteman has allegedly "consented to and acknowledged M & T Bank's right to have a receiver appointed" upon default. (ECF No. 25 ¶¶ 141, 150).
In response, Minuteman argues that a court-appointed receiver is not justified because there is no existing emergency. (See ECF Nos. 10, 24). Minuteman contends that only non-essential assets have been liquidated to satisfy outstanding debt obligations and that Minuteman is now current on payments to M & T Bank. (ECF No. 10 at 3, 7, 10; ECF No. 24 at 5). Minuteman also argues that M & T Bank has failed to show irreparable harm, inadequate remedies at law, or any decreased value in Minuteman's substantial real estate holdings. (ECF No. 24 at 3-5). Finally, Minuteman argues that there is no evidence of fraud, waste, or the diversion of assets in this case, and that a court-appointed receiver would merely exacerbate Minuteman's existing problems. (Id. at 6, 12).
The Court makes findings of fact with regard to the following: (1) the seizure of Minuteman's assets, (2) key events occurring shortly after the seizure, (3) Minuteman's alleged misrepresentations to M & T Bank, (4) the helicopter sale, (5) the status of Minuteman's loans and business operations, (6) the current value of M & T Bank's collateral, and (7) the proposed receiver.
Monthly Payment Principal
Borrower Loan Repayment Status Balance
Minuteman Spill Line of Credit interest only Due for $1,145,000.00
Response #34 9/23/2013
Minuteman Spill Term Loan $76,666.67 Past Due $3,602,309.40
Response # 190 (8/8/2013)
Minuteman Spill Term Loan $7,333.33 Due for $352,000.34
Response #208 9/23/2013
Minuteman Spill Term Loan $2,228.37 Due for $109,189.93
Response #216 10/17/2013
B3 Management Mortgage # 18 $12,300.00 Due for $2,681,4 00.00
10/19/2013
B3 Management Term Loan $12,557.30 Due for $1,169,648.97
#26 10/14/2013
BPK Holdings Mortgage $3,641.14 Due for $363,737.78
# 545125 10/01/2013
BPK Holdings Term Loan $4,851.64 Due for $713,191.43
# 545137 10/18/2013
___________________________________________________________________________________
Total $10.136.477.85
___________________________________________________________________________________
After carefully reviewing the evidence in this case, the Court finds that a court-appointed receiver is not justified. Equity does not demand a receiver, nor do any of the loan documents show that the parties agreed to a receiver in the event of default.
M & T Bank has not shown that an emergency exists or that a receiver is necessary to protect M & T Bank's property interests. See Comerica Bank v. State Petroleum Distributors, Inc., 3:08-CV-678, 2008 WL 2550553 (M.D.Pa. June 2, 2008). Since M & T filed the complaint in this matter, Minuteman has made several loan payments to M & T Bank. As of September 18, 2013, only one loan was past due—Term Loan 190—for $83,993.73. (Def. Ex. A). M & T Bank could make this loan payment current by applying the net proceeds it now holds from the helicopter sale. As of September 27, 2013, Minuteman also owed $1,145,445.28 on Line of Credit # 34. Even so, M & T Bank has not demonstrated that an emergency exists simply because Minuteman is behind on certain loan payments.
M & T Bank also failed to show that a receiver is necessary to protect M & T Bank's collateral. The only significant asset that Minuteman has liquidated since the May 29, 2013 seizure is a helicopter. Both M & T Bank and the Commonwealth had previously approved this sale (Hr'g Tr. vol. 1 at 13:3-6, 56:5-12); M & T Bank received in excess of $2.5 million from the sale; and M & T Bank representatives acknowledged that Minuteman did not sell the helicopter at a "fire sale price" (Hr'g Tr. vol. 1 at 144:19). Moreover, there is no evidence to suggest that Minuteman has been jeopardizing the value of M & T Bank's collateral or intentionally concealing assets.
The scales of equity also weigh against a receiver. As noted above, in determining whether to appoint a receiver, the following equitable factors are considered:
Comerica Bank, 2008 WL 2550553 at *4 (citations omitted). The financial position of Minuteman is the only factor weighing in favor of a receiver. Minuteman has readily acknowledged that the pending criminal investigation has harmed its business and that it now struggles financially to maintain operations. (ECF No. 24 at 5; Hr'g Tr. vol. 2 at 151:17; Pl. Ex. 16). Nevertheless, financial stress alone is an insufficient reason to justify the extraordinary remedy at issue here.
Notable factors weighing against a receiver include the adequacy of legal remedies, the absence of irreparable injury, and
With respect to irreparable injury, M & T Bank made several unpersuasive claims. Specifically, M & T Bank states that it has been irreparably harmed by
(ECF No. 22 at 3). As stated above, there is no evidence that Minuteman has been concealing M & T Bank's collateral assets. Moreover, all of M & T Bank's other claims indirectly state the same thing: there is concern that Minuteman cannot repay the loans. Not only is monetary harm insufficient to show irreparable injury, Acierno v. New Castle Cnty., 40 F.3d 645, 653 (3d Cir. 1994), M & T Bank presented no evidence as to the value of Minuteman's assets. M & T Bank holds four mortgages on Minuteman properties; liens on vehicles; and a first priority secured interest in all assets of Minuteman Spill Response, Inc.
Finally counseling against a receiver in this case are the severe ramifications that would accompany this remedy. Minuteman provides highly specialized services, and the proposed receiver has no familiarity with this type of business. (Pl. Ex. 32). As well, a receiver's fees could exacerbate Minuteman's financial problems. Indeed, "[t]here is nothing . . . which affects a corporation with such serious consequences as does the appointment of a receiver; it is a severe, and may be termed an heroic, remedy, and the conditions that call it into action should be such as would, if persisted in, ordinarily be fatal to corporate life." McDougal v. Huntingdon & Broad Top Mountain R.R. & Coal Co., 294 Pa. 108, 143 A. 574, 577 143 A. 574, 577 (1928). The Court will
The final matter this Court must consider is whether the parties expressly agreed to a receiver upon default. The mortgages documents in this case provide:
(Pl. Exs. 21, 2P, 2Q, 2R, 2X at §§ L.2) (emphasis added). Although this language may show that the parties consented to a receiver upon default, M & T Bank is not seeking a receiver to manage or collect rents from the mortgaged properties. Instead, M & T Bank requests that the
The second provision at issue involves the MSR/B3 Security Agreement and the BPK Security Agreement. These documents provide:
(Pl. Ex. 2L, 2T at §§ 7.2.4) (emphasis added). This language does not plainly evidence that the parties agreed to a receiver in the event of default. Instead, this language only contemplates that a receiver may be appointed and that, if a receiver is appointed, then the receiver would have the powers provided under the terms of the security agreement. Without clear, unambiguous language evidencing that the parties agreed to a receiver upon default, the Court will not appoint a receiver absent a prior showing that equity demands one. See, e.g., Comerica Bank, 2008 WL 2550553 at *4 (finding that a security agreement did not establish consent to a court-appointed receiver because the language did not clearly show "that the parties agreed to appoint a receiver in the event of a default").
The Court has carefully considered all of the parties' arguments. To the extent any issue was not specifically addressed above, it is either moot or without merit. For the reasons stated above, the Court will
An appropriate order follows.
It appearing that no further action of the Court is required at this time, the Clerk of Court shall mark the above-captioned case
