The opinion of the court was delivered by: Lisa Pupo Lenihan United States Magistrate Judge
Magistrate Judge Lisa Pupo Lenihan
For the reasons set forth below, the Plaintiff's Motion for Partial Summary Judgment will be granted.
In late December, 2006, Defendant Commercebank, N.A. ("Commercebank") began commercial financial transactions with a Texas limited liability corporation called Biotechnologies, which it believed to be owned by entities including Callahan & Chase, LLC ("C&C"), and to have a Board of Directors including W. Scott Callahan ("Callahan"). See Defendant's Responsive Concise Statement of Material Facts ("Responsive Concise Statement") at ¶¶ 1-7. Principles and Directors of Biotechnologies represented to Commercebank that the company was doing business with Thermo Fisher Scientific ("Thermo Fisher"), and that the latter anticipated purchases of approximately $30 Million per annum. Purported Thermo Fisher corporate resolutions and other documents were provided in support of these and further representations. The purported correspondence from Thermo Fisher directed any additional questions to Callahan. In January, 2007 Commercebank advanced monies to Biotechnologies -for the purchase of what it believed to be legitimate product invoices to Thermo Fisher - in the amounts of $1,750,360 and $997,500. See id. at ¶¶ 8-23.
The first payment on these transactions was due in February, 2007 and not received. See Plaintiff's Concise Statement of Material Facts ("Plaintiff's Concise Statement") at ¶ 36 and Exhibit 4 to Plaintiff's Brief in Support of Motion for Summary Judgment ("Plaintiff's Brief in Support").*fn1 On March 19, 2007, Commercebank received a $700,000 wire transfer from an entity called Fisher Care Company ("Fisher Care"); on March 26, 2007, the bank received a second wire transfer of $153,675 from the same entity. See Responsive Concise Statement at ¶¶ 27-28.
On April 25, 2007, Commercebank received correspondence from Thermo Fisher's deputy general counsel informing Commercebank that Thermo Fisher had no business relationship with Biotechnologies, it neither purchased nor received any product, the documents were forgeries, and the matter had been turned over to the FBI. See id. at ¶ 29 and Exhibit 11 (Letter from Thermo Fisher). Commercebank spoke with the FBI, Callahan and Thermo Fisher that same day, and retained outside legal representation from Bryan Dumesnil ("Dumesnil" or "Commercebank's Counsel"). See id. at ¶¶ 30-32.
At approximately the same time, i.e., late April, 2007, Callahan approached Ameriserv bank in Pennsylvania, for loans on behalf of C&C and CalChaseMed, LLC ("CCM"), of which he asserted to be President, and which he represented to require working capital to complete a $1,745,040 purchase order from Home Depot.*fn2 As with the monies solicited from Commercebank, documentation purportedly supportive of the underlying business transactions was provided. See Plaintiff's Concise Statement at ¶¶ 2-6. Ameriserv issued a Commitment Letter for an $875,000 secured working capital bridge loan and a $2M secured working capital line of credit. See id. at ¶¶ 6-7.
On May 11, 2007, Commercebank, through its Counsel, filed litigation in Texas State Court against Callahan, C&C, CCM, Biotechnologies, and others alleging that its financing agreements were in default,*fn3 and that the underlying transactions were rife with fraud and forgeries. The Complaint further alleges that "Fisher Care" was simply "a fictitious name for" the Callahan entity CCM. See Exhibit 4 to Plaintiff's Brief in Support of Motion for Summary Judgment (Texas Complaint).
On May 14, 2007, Commercebank's Counsel had telephone and e-mail communication from Callahan attaching a May 11, 2007 Commitment Letter from Plaintiff Ameriserv to C&C and CCM in the total amount of $2,875,000 (the "Ameriserv Commitment Letter"). See Responsive Concise Statement at ¶¶ 37-40. "The purpose of the Commitment Letter was 'to provide working capital, specifically to support a purchase order from Home Depot (PO #03032579)'." Id. at ¶ 40. Commercebank represents that the purpose of Callahan's presentation of the Commitment Letter was to demostrate that "Callahan was legitimate, still in business, capable of receiving funds from a bank and was not a fraud." Id. at ¶ 41. The May 14th email from Callahan providing the Ameriserv Commitment Letter to Commercebank's Counsel states:
Per our conversation I have attached our commitment letter. The documents are being drawn up today and tomorrow and we should sign either Weds or Thurs. Can you please call me after reviewing this document so that we can discuss the timing. Also, you said you would keep this confidential so that we can resolve the current issue at hand.
See Deposition Testimony of Bryan S. Dumesnil and Exhibits thereto.*fn4
The Ameriserv documents were provided to Commercebank. Id. at 17. Commercebank's Criticized Asset Report indicates that "[o]n 5/14/07, Scott Callahan set to [Dumesnil] a commitment letter from Ameriserv Financial to evidence he was working to get the funds to repay Commercebank." Id. at 19 and Exhibit 6. In addition, Nathan Kutt ("Kutt"), Commercebank's Senior Vice President and General Counsel, and designated Rule 30(b)(6) representative, has testified that Callahan told ...