Wechsler v. Hunt Health Systems, Ltd.
Decision Date | 11 August 2004 |
Docket Number | No. 94 Civ. 8294(PKL).,94 Civ. 8294(PKL). |
Citation | 330 F.Supp.2d 383 |
Parties | Raymond H. WECHSLER, Administrative Trustee of the Towers Financial Corporation Administrative Trust, Plaintiff, v. HUNT HEALTH SYSTEMS, LTD., P & G Enterprises, Inc., MHTJ Investments, Inc., Esperanza Health Systems, Ltd. and Friendship, Inc., Defendants. |
Court | U.S. District Court — Southern District of New York |
Gadsby Hannah LLP, Boston, MA, Daniel J. Kelly, William A. Zucker, Neil W. Salon, Leader & Berkon LLP, New York City, Joseph G. Colao, for Plaintiff.
Brooks Banker & Assocs., New York City, Brooks Banker, Jr., Todd Lawlor, Paul R. Levenson, for Defendants.
Plaintiff Raymond H. Wechsler, the administrative trustee overseeing the assets of Towers Financial Corporation ("Towers"), brings this action against Hunt Health Systems, Ltd. ("Hunt Health") and affiliated entities for breach of contract, conversion, breach of guaranty, and fraudulent conveyance in connection with the parties' factoring agreement. From October 22, 2003, through November 4, 2003, the Court conducted a bench trial regarding the disputed issues in the case, and the parties subsequently submitted post-trial briefs further addressing those issues. Having considered the parties' post-trial submissions and the evidence presented at trial, the Court sets forth herein its findings of fact and conclusions of law, pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.1
This case arises out of a factoring agreement between Towers and Hunt Health. The agreement set forth the terms for Hunt Health's sale, and Towers' purchase, of Hunt Health's accounts receivable. In general, the agreement provides that Hunt Health will offer to sell its Reimbursable Accounts Receivable, payable by insurance companies, to Towers. The agreement further provides that Towers, upon choosing to purchase an account of Hunt Health, will make an initial payment, or advance, to Hunt Health, in the amount of 50% of the account's Reimbursable Value. After Towers makes this initial payment, or advance, it earns a "factoring fee" from Hunt Health while that advance remains outstanding. Then, when the insurance company thereafter remits its payment for the account, Towers recoups its advance, Hunt Health receives the balance, and Towers ceases to earn its factoring fee for that account.
The parties reached this factoring agreement in July 1991, significantly amended it in September 1992, operated outside its bounds from October 1992 to February 1993, and ended it on February 26, 1993. By that date, all of Hunt Health's accounts receivable, which had a total face value of $3.5 million, had been sold to Towers. Towers' outstanding initial payments, or advances, to Hunt Health as of that date totaled $910,000. In this action plaintiff demands the return of Towers' initial payments, or advances, on the theory that the accounts receivable Hunt Health sold to Towers were bad accounts. Plaintiff also demands the payment of factoring fees owed by Hunt Health for the outstanding advances. Defendants answer that plaintiff fails to show that Hunt Health sold bad accounts to Towers, and that Towers, in any event, breached the contract first. Defendants also demand, by their counterclaim, the payment of the balance of the accounts Hunt Health sold to Towers.
Plaintiff is Raymond H. Wechsler. In December 1994, Wechsler...
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