Brookridge Funding v. Northwestern Human Services

• Decision Date: 04 December 2001
• Docket Number: No. 3:99CV2339(CFD).,3:99CV2339(CFD).
• Citation: 175 F.Supp.2d 355
• Parties: BROOKRIDGE FUNDING CORP., Plaintiff, v. NORTHWESTERN HUMAN SERVICES, Defendants.
• Court: U.S. District Court — District of Connecticut

175 F.Supp.2d 355

BROOKRIDGE FUNDING CORP., Plaintiff, v. NORTHWESTERN HUMAN SERVICES, Defendants.

No. 3:99CV2339(CFD).

United States District Court, D. Connecticut.

December 4, 2001.

COPYRIGHT MATERIAL OMITTED

William J. Hagan, Danbury, CT, Douglas R. Steinmetz, Meiselman, Denlea, Packman & Eberz, White Plains, NY, for Plaintiff.

Donald E. Frechette, Janet Marie Helmke, Edwards & Angell, Hartford, CT, Robert B. Bodzin, Nicole R. Rodrigue, Schnader, Harrison, Segal & Lewis, LLP, Philadelphia, PA, for Defendants.

RULING ON MOTIONS FOR SUMMARY JUDGMENT

DRONEY, District Judge.

I. Introduction

This action arises out of several agreements relating to the financing for the construction of a baseball stadium in Allentown, Pennsylvania, known as the Lehigh Valley Stadium Project. Plaintiff Brookridge Funding Corporation ("Brookridge"), an accounts receivable factoring firm, brings this suit against Northwestern Human Services ("Northwestern"), the owner of the land on which the stadium has been partially constructed. Brookridge seeks to collect $2,759,024.43 from Northwestern on account invoices allegedly owed by Northwestern to the stadium project's construction manager, Contracting Systems, Inc. II ("CSI"). Brookridge claims to have purchased these account invoices from CSI.

The Second Amended Complaint, filed on April 13, 2000 ("the Complaint"), contains three counts against Northwestern: breach of contract, account stated, and unjust enrichment. Northwestern has asserted various affirmative defenses in its January 29, 2001 Amended Answer and Affirmative Defenses ("the Answer").¹

This Court has diversity jurisdiction over this matter, as the plaintiff is a Delaware corporation with its principal office in Connecticut, the defendant is a Pennsylvania corporation with an address in that state, and the amount in controversy exceeds $75,000.² See 28 U.S.C. § 1332.

Two motions are currently pending: the Motion for Summary Judgment of Defendant Northwestern Human Services [Doc. # 37] and Brookridge's Motion for Summary Judgment [Doc. # 40]. For the following reasons, the defendant's motion is DENIED and the plaintiff's motion is GRANTED IN PART, DENIED IN PART.

II. Background³

As explained above, Brookridge is an accounts receivable factoring firm that allegedly purchased certain account invoices from CSI. As a factor, Brookridge buys accounts receivable from clients at a discounted price. See Black's Law Dictionary (7th ed.1999). The price is discounted because factors (such as Brookridge) assume the risks of delay in collection and loss on the accounts receivable. See id. Northwestern is a not-for-profit corporation that owns the land upon which the stadium project has been partially constructed, but the parties dispute whether Northwestern has a greater role in the development of the stadium. Northwestern's Chief Executive Officer is Robert Panaccio ("Panaccio"). CSI is the stadium project's construction manager that was to be paid $10,500,000 for its services by the owner of the stadium property under the "Standard Form of Agreement Between Owner and Construction Manager," dated December 15, 1998. See Def.'s Memo. Opp. Summary Judgment, Ex. D. The December 15, 1998 agreement lists the owner as Federal Development Company as "Agent for" Northwestern, and the agreement is signed by a representative of Federal Development Company ("Federal"), though the signature is illegible. Other than Federal, no representative from Northwestern appears to have signed this document. Federal appears to be linked to Northwestern through Thomas Flaherty ("Flaherty"), a former member of the Board of Directors of Northwestern and a principal of Park Place Builders, Inc. d/b/a Federal Development Company ("Federal"). The precise nature of Federal's role in the stadium project is unclear. In particular, the parties dispute whether Flaherty persuaded Northwestern to enter into a formal agreement to develop the stadium and whether Federal had the authority to enter into the December 15, 1998 agreement with CSI on behalf of Northwestern.

In June 1999, CSI entered into an Accounts Receivable Purchase Agreement ("Accounts Receivable Agreement") with Brookridge. See Compl. Ex. A. Under the terms of that agreement, CSI agreed to submit account invoices to Brookridge for possible purchase, and Brookridge had the authority to determine whether the accounts were "acceptable" for purchase. Id. at 1. If Brookridge purchased an account, it agreed to advance 70 percent of the face value of the accounts to CSI at the time of purchase, and the balance upon full payment by the account debtor, minus a "Factors' fee." Id. CSI also granted Brookridge a security interest in its accounts and other property. Id. at 5. In addition, the Accounts Receivable Agreement also provides that Brookridge may seek recourse against CSI when an account is not paid in full. Id. at 2.⁴

According to Brookridge, in June 1997, CSI submitted requests for Brookridge to purchase two of its accounts receivable, namely, two accounts allegedly owed by Northwestern to CSI, presumably under the terms of the December 15, 1998 agreement. See McNiff Aff., Ex. A. These accounts were valued at $1,425,112.60 (set forth in application # 5) and $1,333,911.83 (set forth in application # 6), resulting in a total value owed to CSI of $2,759,024.43. Id. In July 1999, Northwestern, Brookridge, and CSI executed a Notice of Purchase of Accounts Receivable ("the Notice"). See Compl. Ex. B. The Notice stated, in part, the following:

Notice is hereby provided to you that Brookridge Funding Corporation ("BFC") has purchased the accounts receivable of Contracting Systems, Inc. II (Assignor). By its signature below, Assignor hereby instructs you ... to make all payments owing pursuant to the attached invoice in the amount of $2,759,024.43 by the Undersigned to the Assignor directly to BFC as per the instructions provided below.

To induce BFC to provide financial services to Assignor, including without limitation the purchase of its accounts, the Undersigned [purportedly Northwestern] hereby represents and warrants to BFC as follows:

1. As of the date hereof the amount owing on the attached invoice by the Undersigned to Assignor, and the amount to be paid to BFC pursuant to the obligations of the Undersigned is $2,759,024.43. Such sum is owed absolutely and the Undersigned has no right of counterclaim, contraclaim, setoff or any other right of deduction from such sum.

2. The Undersigned acknowledges that the $2,759,024.43 owing by the Undersigned to Assignor shall be paid directly to BFC. This assignment may only be released by BFC and no action of Assignor shall affect any of the Undersigned's obligations to make payment directly to BFC.

See Compl. Ex. A. The Notice was signed by representatives of Brookridge and CSI, and by Mr. Panaccio of Northwestern. Brookridge claims that execution of this Notice was a precondition to its decision to purchase the two accounts receivable from CSI. Brookridge's President John A. McNiff III also claims to have discussed the Notice with Mr. Panaccio prior to its execution, but Mr. Panaccio disputes his recollection of their conversation. See McNiff Aff. ¶¶ 11-13; Panaccio Aff. ¶¶ 10-15. The parties agree, however, that Northwestern has refused to pay the sum of $2,759,024.43 to Brookridge.

In addition to this action, Northwestern has brought a separate suit against CSI and CSI's President, John W. Clarke, in the United States District Court for the District of Connecticut seeking damages on the basis that CSI failed to pay the amount owed to Brookridge. See Statement Uncontested Facts Supp. Mot. Summ. J., Ex. D, Brookridge Funding Corp. v. Contracting Systems, Inc. II & John C. Clarke, Civil Action No. 3:00CV2252(SRU). Further, CSI has filed a claim under the construction contract against Northwestern with the American Arbitration Association. See Statement Uncontested Facts Supp. Mot. Summ. J., Ex. E.

III. Standard

In a motion for summary judgment, the burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. See Fed. R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A court must grant summary judgment "`if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact.'" Miner v. City of Glens Falls, 999 F.2d 655, 661 (2d Cir. 1993) (citation omitted). A dispute regarding a material fact is genuine "'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir.1992) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). After discovery, if the nonmoving party "has failed to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof," then summary judgment is appropriate. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The Court resolves "all ambiguities and draw[s] all inferences in favor of the nonmoving party in order to determine how a reasonable jury would decide." Aldrich, 963 F.2d at 523. Thus, "[o]nly when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.1991); see also Suburban Propane v. Proctor Gas, Inc., 953 F.2d 780, 788 (2d Cir.1992). Additionally "where ... the non-movant bears the burden of proof at trial, the movant can satisfy its burden of production by pointing out an absence of evidence to support an essential element of the non-movant's case." Ginsberg v. Healey Car & Truck Leasing, Inc., 189 F.3d 268, 270 (2d Cir.1999) (citing Celotex, 477 U.S. at 323-24, 106 S.Ct. 2548 and Tops...