2007 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-17-2007

DVI Fin Ser Inc v. Bay Area Regional

Precedential or Non-Precedential: Non-Precedential

Docket No. 05-3176

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Recommended Citation

"DVI Fin Ser Inc v. Bay Area Regional" (2007). 2007 Decisions. Paper 1285.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 05-3176

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DVI FINANCIAL SERVICES, INC.;

USBANK PORTFOLIO SERVICES, a division of

Lyon Financial Services, Inc. as Servicer for

DVI Receivables XV, L.L.C.

v.

BAY AREA REGIONAL CANCER CENTER, L.P.; PINOLE RADIATION

ONCOLOGY MEDICAL ASSOCIATES, INC.; 

ATHUR PORTER, M.D.; JAMES FONTANESI,

 Appellants

(Amended per Court’s order of 8/29/06)

___________

 

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil No. 03-cv-03055)

District Judge: The Honorable Charles R. Weiner

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Submitted Under Third Circuit LAR 34.1(a)

October 3, 2006

Before: McKEE, AMBRO, and NYGAARD, Circuit Judges.

(Filed April 17, 2007 )
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OPINION OF THE COURT

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NYGAARD, Circuit Judge.

I. 

DVI Financial Services (DVI) agreed to provide medical equipment and financing

to Bay Area Regional Cancer Center and its founders (collectively Bay Area) for

construction of the center and its initial operations. The parties executed a Master

Equipment Lease Agreement, a Loan and Security Agreement and repayment schedules.

In addition, Bay Area’s founders signed unconditional guarantees to back its obligations. 

Bay Area faltered financially, and the parties restructured the arrangement twice.

After Bay Area defaulted for a third time, DVI filed a breach of contract action against

Bay Area and its guarantors in the Bucks County Court of Common Pleas. Bay Area

removed the suit to the District Court on diversity grounds. Meanwhile, DVI filed for

Chapter 11 bankruptcy protection and assigned its rights against Bay Area to DVI

Receivables XV, LLC. DVI Receivables hired U.S. Bank Portfolio Services (U.S. Bank)

and granted it a power of attorney to pursue collections. 

The District Court granted U.S. Bank’s motion to join the action as a plaintiff

under FED. R. CIV. P. 25(c). The court conducted a bench trial and granted U.S. Bank a

$5,332,763.43 judgment, plus attorneys’ fees and costs. Bay Area’s motion for a new
1. The case was originally assigned to the Hon. Charles R. Weiner. Judge Weiner

passed away on November 9, 2005. Senior District Judge John Fullam adjudicated the

case upon remand. 

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trial was denied, and it appealed. Pursuant to FED. R. APP. P. 10(e), we remanded the

case to the District Court to determine whether it afforded Bay Area an opportunity to

contest U.S. Bank’s joinder under FED. R. CIV. P. 25(c). The District Court approved a

stipulated supplement to the record and concluded Bay Area had a sufficient opportunity

to oppose the joinder. We will affirm.

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II. 

A. 

First, Bay Area argues that the District Court denied it an opportunity to contest

U.S. Bank’s joinder as a plaintiff. We disagree. The District Court held two

teleconferences with the parties, permitted Bay Area to file a brief in opposition to U.S.

Bank’s motion to join and amended its order to facilitate Bay Area’s counterclaims

against DVI. We are satisfied that the District Court granted Bay Area a sufficient

opportunity to be heard on the matter.

Bay Area also contends the District Court abused its discretion in allowing U.S.

Bank to join under FED. R. CIV. P. 25(c). Rule 25(c) provides, in relevant part: 

In case of any transfer of interest, the action may be continued by or against

the original party, unless the court upon motion directs the person to whom
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the interest is transferred to be substituted in the action or joined with the

original party. 

FED. R. CIV. P. 25(c) (2007).

U.S. Bank possessed a transferable interest in the action by virtue of its power of

attorney and its contractual obligations to DVI Receivables XV. In addition, DVI

remained a party to the action and was subject to Bay Area’s counterclaims. The District

Court did not abuse its discretion when it permitted U.S. Bank to join the action as an

additional plaintiff. 

B. 

Second, Bay Area argues that their agreements with DVI did not specify the

applicable interest rate, and that therefore it was to be calculated as a six-percent simple

rate, pursuant to Pennsylvania law. Where the parties fail to provide for a specific rate

and method of computation, Pennsylvania law implies a six-percent rate calculated only

upon the original principal. See 41 PA. STAT. ANN. §202 (West Supp. 2006), and

Murray v. Prudential Ins. Co. of Am., 18 A.2d 820, 823 (Pa. Super. 1941). Here, there is

no need to imply the interest rate or method of computation, because the parties agreed to

the amount borrowed, the amount to be repaid and the schedule of repayment. The

District Court properly inferred the applicable interest rate and method of computation

from the agreed-upon sums. The court’s calculation of Bay Area’s liability was not

clearly erroneous.
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C. 

Finally, Bay Area claims that the District Court clearly erred in finding that DVI

credited it with unearned finance charges and that DVI did not impose penalty charges

against them. Schedule No. 4, however, established the terms of the final restructuring,

and therefore provided conclusive evidence of the parties’ intended agreement. Yocca v.

Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436-37 (Pa. 2005). Bay Area failed to

show that they agreed to the terms of the final restructuring because of fraud or mistake. 

III. 

The District Court provided Bay Area with sufficient opportunity to challenge the

joinder of U.S. Bank, and did not abuse its discretion in allowing U.S. Bank to join the

action. Neither did the court err in calculating Bay Area’s obligations. We will affirm the

court’s order. 

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