Mfrs. & Traders Trust Co. v. Minuteman Spill Response, Inc.

• Decision Date: 16 December 2013
• Docket Number: Civil Action No. 3:13–174.
• Parties: MANUFACTURERS AND TRADERS TRUST COMPANY, Plaintiff, v. MINUTEMAN SPILL RESPONSE, INC., B3 Management, L.P., BPK Holdings, LLC, Everest Aviation LLC, BPK Captive, Inc., Double B Realty, and Minuteman Towing, Inc., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

999 F.Supp.2d 805

MANUFACTURERS AND TRADERS TRUST COMPANY, Plaintiff

v.MINUTEMAN SPILL RESPONSE, INC., B3 Management, L.P., BPK Holdings, LLC, Everest Aviation LLC, BPK Captive, Inc., Double B Realty, and Minuteman Towing, Inc., Defendants.

Civil Action No. 3:13–174.

United States District Court, W.D. Pennsylvania.

Filed Dec. 16, 2013.

William E. Kelleher, Cohen & Grigsby, P.C., Pittsburgh, PA, Plaintiff.

Thomas E. Brenner, Thomas J. Weber, Goldberg Katzman, P.C., Harrisburg, PA, for Defendants.

MEMORANDUM AND ORDER OF COURT

KIM R. GIBSON, District Judge.

I. INTRODUCTION

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 Plaintiff's 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 deny Minuteman's motions and will further deny M & T Bank's motion for a receiver.

II. JURISDICTION

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.

III. BACKGROUND

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,¹ Minuteman has acquired several loans through M & T Bank that remain outstanding as of September 19, 2013:

(1) On November 17, 2011, Minuteman Spill Response, Inc. (“Minuteman Spill”) executed a Line of Credit Note for $1,500,000 (Compl. Ex. A), along with a Security Agreement granting M & T Bank a first priority security interest in all assets of Minuteman Spill (see id. Exs. B, C);

(2) On August 21, 2012, Minuteman Spill executed a Term Note for $440,000, secured by a lien on certain vehicles (see id. Ex. D);

(3) On October 17, 2012, Minuteman Spill executed a Term Note for $133,702, secured by a lien on certain vehicles (see id. Ex. E);

(4) On June 8, 2012, Minuteman Spill executed a Term Note for $4,600,000, secured by a lien on certain vehicles (see id. Ex. F);

(5) On November 17, 2011, B3 Management, L.P. executed a Term Note for $2,952,000, secured by a mortgage on real property located at 2435 Housel Run Road, Milton, Pennsylvania (see id. Exs. G, H, I);

(6) On November 14, 2012, B3 Management, L.P. executed a Term Note for $1,500,000; in connection with this Note, Minuteman Spill entered into a Continuing Guaranty and General Security Agreement with M & T Bank (“MSR/B3 Security Agreement”), granting M & T Bank a first priority security interest in all assets of Minuteman Spill (see id. Exs. J, K, L, M);

(7) On December 16, 2010, BPK Holdings, LLC executed a Term Note for $873,295.55, secured by three mortgages on real property located at 901 Old Route 15, White Deer, Pennsylvania; 3066 East Valley Road, Loganton, Pennsylvania; and 509 West Third Street, Mifflinville, Pennsylvania (see id. Exs. N, O, P, Q, R);² and

(8) On April 9, 2009, BPK Holdings, LLC and Minuteman Towing, Inc. executed a Loan Agreement with M & T Bank, wherein M & T Bank agreed to make a $680,000 Mortgage Loan and a $600,000 Term Loan; this agreement was secured by a mortgage on real property located at 401 Richardson Road, Middletown, Pennsylvania (see id. Exs. V, W, X).

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.³

IV. DEFENDANTS' MOTIONS IN RESPONSE TO THE COMPLAINT

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.

A. Minuteman's Motion to Transfer Venue

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).

1. Legal Standard for Change of Venue

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 plaintiff's “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:

BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE COMMONWEALTH OF PENNSYLVANIA IN A COUNTY OR JUDICIAL DISTRICT WHERE THE BANK MAINTAINS A BRANCH ... Borrower acknowledges and

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