Opinion ID: 2779330
Heading Depth: 1
Heading Rank: 2

Heading: facts

Text: The Bank and FHR In March 2009, Jack Gray formed FHR for the purpose of acquiring the Facility. FHR and the Bank entered into a Real Estate Lease (the “Lease”) by which FHR leased the Facility. The agreement provided that the Lease would terminate on October 30, 2009, unless the parties entered a different agreement or closed on the sale of the entire premises by that date. The parties never entered into any agreement to extend the Lease beyond October 30, 2009. FHR, however, continued to occupy and operate the Facility without paying rent. The Bank also approved two lines of credit for FHR. As collateral for the lines of credit, FHR entered into two security agreements by which it assigned and pledged to the Bank first lien position security interests in all of FHR’s business assets, including A/R. The Bank perfected its security interests by filing UCC Financing Statements. In August 2009, the parties entered into an agreement to sell the real estate of the Facility (“the Agreement of Sale”), but the sale was never consummated due to FHR’s failure to make the $2,500,000 down payment. In January 2010, the Bank advised FHR that it was unwilling to loan additional funds under the credit lines. Catahama Invests in FHR In February 2010, FHR identified Catahama as a potential factor. Catahama alleges that it agreed to provide working capital and to fund customer orders for FHR 3 provided that Catahama would have a first lien collateral security position in, inter alia, receivables generated by Catahama’s financing of those customer orders. According to Gray, David Hepler, Senior Vice President of the Bank, “assured [him] the Bank would not claim an interest in the receivables . . . funded by Catahama” (the “Forbearance Representation”). App. 505. Gray passed this message on to Herbert Feinberg, Catahama’s principal. Subsequently, FHR borrowed $2,162,375.15 from Catahama. It is undisputed that this alleged forbearance agreement was not in writing and that there were never any direct discussions between the Bank and Catahama regarding the negotiation of a lien subordination agreement. Hepler denies that he ever made such a representation.1 The Bank Terminates the Agreements with FHR On May 6, 2010, the Bank sent FHR several letters providing “formal notice” that the Bank had elected to terminate the Agreement of Sale and the Lease. App. 272-76, 279-80 (the “May 6 Termination Letters”). The letters noted that FHR was past due on rent payments and in default on its lines of credit. The letters also asked FHR to contact either Hepler or Paul McGrath, the Banks’s counsel, with any questions. A month later, the Bank advised FHR that it had agreed to sell the Facility to another party and demanded that FHR quit the premises by July 26, 2010. Catahama Wires $575,000 to the Bank On July 12, 2010, Catahama wired $575,000 to the Bank on behalf of FHR. 1 Even if Hepler had made such a representation, Catahama cannot carry its burden of proving promissory estoppel under Pennsylvania law. 4 Catahama intended the payment to cure the default in rent payments claimed by the Bank in the May 6 Termination Letters. Before Catahama sent the wire, Jack Gray’s assistant called the Bank and asked how FHR could make a payment on its “mortgage.” App. 644. The Bank employee she spoke with could not locate a mortgage account, so she faxed a list of FHR’s accounts at the Bank to FHR. However, neither Gray nor Feinberg could identify the appropriate account to which payment should be directed. Gray called the Bank and spoke with an unidentified Bank employee who told him to direct payment to an account ending in “99999.” Neither Gray nor his assistant specifically mentioned Catahama, the $575,000 wire, the Real Estate Lease, or curing FHR’s default in either of the phone calls. Feinberg then instructed his bank (Deutsche Private Bank) to wire $575,000 from Catahama to the “99999” account at the Bank and to direct application of the payment to the “Open-End Mortgage, Security Agreement, and Fixture Filing dated August 31, 2009.” App. 288. The wire was directed to Hepler’s attention, but Hepler was on vacation when the wire was received. Bank personnel applied the payment to a commercial loan account ending in “00199” instead of the specified account ending in “99999.” The two accounts, however, were related or “joint.” App. 787. The “99999” account tracked the availability of a commercial line of credit and the “00199” account tracked the balance owed on that line of credit. The funds were not applied to the rental arrearages. Shortly after the deposit, Catahama filed suit seeking, inter alia, return of the 5 $575,000, and a declaration that Catahama rather than the Bank was entitled to FHR’s A/R. In its Amended Complaint, Catahama alleges (1) that the Bank will be unjustly enriched if it is permitted to retain the $575,000 wire payment, and (2) that under the doctrine of promissory estoppel, the Bank’s promise to forbear its interest in FHR’s A/R is enforceable. More important, Catahama is therefore entitled to the A/R.2 On October 31, 2013, the District Court granted summary judgment against Catahama on these claims.