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Pnc Bank, National Association, Successor To National City Bank v. Daniel Kanaan

May 21, 2012

PNC BANK, NATIONAL ASSOCIATION, SUCCESSOR TO NATIONAL CITY BANK, AS LENDER AND AS AGENT FOR LENDERS
v.
DANIEL KANAAN



The opinion of the court was delivered by: Surrick, J.

MEMORANDUM

Presently before the Court is Defendant Daniel Kanaan's Motion to Dismiss Plaintiff's Amended Complaint for Lack of Personal Jurisdiction and for Improper Venue, or in the Alternative, to Transfer Venue. (ECF No. 7.) For the following reasons, the Motion will be denied.

I. BACKGROUND

A. Facts*fn1

1. The Parties Plaintiff PNC Bank, National Association, Successor to National City Bank, as Lender and as Agent for Lenders, is a national bank chartered under the laws of the United States. (Am. Compl. ¶ 1, ECF No. 6.) Plaintiff's home office, as set forth in its Articles of Association, is in Delaware, and its principal place of business is in Pennsylvania. (Id.)

Defendant is an adult individual residing in Canton, Michigan. (Id. at ¶ 2.) At all relevant times, Defendant was a forty-percent shareholder of Advanced Communications, Inc. ("ACI"), a Michigan corporation that provides outsourced business services and which has a principal place of business in Wayne County, Michigan. (Mich. Verified Compl. ¶¶ 2, 19-22, 24, Def.'s Mot. Ex. 7, ECF No. 7.) Defendant was also the Executive Vice President and Chief Operating Officer of ACI. In that capacity, he was responsible for the sales and field operations of the company. (Id. at ¶ 24.) Defendant claims that he has never been involved in ACI's financial reporting. (Id. at ¶ 25.)

At all relevant times, an individual named Michael A. Falsetti was a sixty-percent shareholder, and President and Chief Executive Officer ("CEO"), of ACI. In that capacity, Falsetti was responsible for managing the financial affairs of the company. (Id. at ¶¶ 22-23.) Falsetti resides in Wayne County, Michigan. (Id. at ¶ 6.) Defendant claims that Falsetti was responsible for maintaining ACI's relationships with its lenders and was a key player in the transaction underlying this lawsuit. (See id. at ¶¶ 92-93, 130-235; Def.'s Br. 6, ECF No. 7.)

2. The Loan Documents

a) Revolving Credit, Term Loan and Security Agreement On October 2, 2009, ACI and National City Bank entered into a Revolving Credit, Term Loan and Security Agreement. (Am. Compl. ¶ 10 & Ex. B ("Revolv. Credit Agreement").) Pursuant to this Agreement, National City Bank agreed to lend to ACI certain advances and ACI agreed to repay those advances in accordance with the Agreement's terms. (Am. Compl. ¶ 11 (citing Revolv. Credit Agreement §§ 2.6, 2.7).) National City Bank also agreed to issue Letters of Credit to ACI, subject to certain conditions. (Am. Compl. ¶ 12 (citing Revolv. Credit Agreement §§ 2.9-2.12).) This Agreement was signed by Falsetti in his capacity as CEO and President of ACI. (Revolv. Credit Agreement.)

b) Revolving Credit Note

Also on October 2, 2009, ACI and National City Bank executed a Revolving Credit Note. (Revolv. Note, Am. Compl. Ex. C.) Pursuant to the terms of the Note, ACI agreed to pay Plaintiff at the end of the term or earlier, as provided in the Revolving Credit, Term Loan and Security Agreement, the lesser of the principal sum of $27 million or a lesser sum as provided in that Agreement. (Id.; Am. Compl. ¶ 13.) Falsetti signed this Credit Note in his capacity as CEO and President of ACI. (Revolv. Note.)

c) Term Loan Note

In addition, on October 2, 2009, ACI executed a Term Loan Note. ACI agreed to pay Plaintiff $1 million or a lesser sum, as provided in the Revolving Credit, Term Loan and Security Agreement. (Am. Compl. ¶ 14 & Ex. D ("Loan Note").) Falsetti signed this Loan Note in his capacity as CEO and President of ACI. (Loan Note.)

d) The Guaranty

On October 2, 2009, National City Bank, Defendant and financial institutions that became lenders entered into a Guaranty and Suretyship Agreement ("Guaranty"). (Guaranty, Am. Compl. Ex. A.) Defendant agreed to guarantee and become the surety for the prompt payment and performance of the Obligations assumed in connection with the Guaranty. (Id. at ¶ 1.) The "Obligations" included:

(i) any and all loans (including, without limitation, all Advances and the Term Loan, advances, debts, liabilities, obligations, covenants and duties) owing by any Borrower . . . to Lenders, Agent or National City Bank under this Agreement, the Other Documents . . . and (ii) any and all loans (including without limitation, all advances, debts, liabilities, obligations, covenants and duties) owing by any Borrower . . . to National City Bank of any kind or nature, in each case whether present or future (including any interest or other amounts accruing thereon, and any costs and expenses arising therefrom of any Person payable by Borrower and any indemnification obligations payable to Borrower . . . arising or payable after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower . . . whether or not a claim for post-filing or post-petition interest or other amounts is allowable or allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Agent's or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, (i) any and all of Borrower's Indebtedness and/or liabilities under this Agreement or the Other Documents or under any other agreement between National City Bank and any Borrower and any amendments, extensions, renewals or increases . . . and (iii) all costs and expenses of Agent, any Lender, or of any other direct or indirect subsidiary or affiliate of Agent or any Lender, incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to, reasonable attorneys' fees and expenses and all obligations of any Borrower . . . to Agent, Lenders or to any other direct or indirect subsidiary or affiliate of Agent or any Lender, to perform acts or refrain from taking any action. (Am. Compl. ¶ 19 (citing Revolv. Credit Agreement § 1.2).) The Guaranty defined an "Event of Default" to include ACI's failure to comply with financial covenants and failure to deliver certain financial projections upon which the revolving line of credit amounts were based. (Am. Compl. ¶ 20.) Plaintiff alleges that Defendant "unconditionally guaranteed" all of ACI's obligations under the Revolving Credit, Term Loan and Security Agreement, and is obligated to repay all of those obligations, without further notice, upon Plaintiff's demand. (Id. at ¶ 21.)

Paragraph 19 of the Guaranty states, in relevant part:

This Guaranty and any other instrument, document or agreement executed or delivered in connection herewith or the transactions related hereto or thereto, and all matters relating hereto and arising herefrom (whether arising in tort, contract law or otherwise), in each case, whether now existing or hereafter arising, shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applied to contracts to be performed wholly within the Commonwealth of Pennsylvania. Any judicial proceeding brought by or against Guarantor with respect to any of the Obligations, this Guaranty, any of the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the Commonwealth of Pennsylvania, United States of America, and, by execution and delivery of this Guaranty, Guarantor accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Guaranty. . . .

Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against Guarantor in the courts of any other jurisdiction. Guarantor waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum nonconveniens. . . .

Any judicial proceeding by Guarantor against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Guaranty or any related agreement, shall be brought only in a federal or state court located in the County of Philadelphia, Commonwealth of Pennsylvania, provided that the foregoing shall not preclude the Guarantor from bringing a claim or counterclaim action in any court in which Agent or any Lender has initiated a judicial proceeding against Guarantor. (Id. at ¶ 19.) Defendant signed the Guaranty. (Am. Compl. ¶¶ 15, 18, 20; see also Guaranty.)

National City Bank loaned money to ACI pursuant to the terms of the Revolving Credit, Term Loan and Security Agreement, Revolving Credit Note, Term Loan Note and Guaranty (collectively, "Loan Documents"). (Id. at ¶ 17.)

4. ACI's Defaults

ACI defaulted on the Revolving Credit, Term Loan and Security Agreement. (Id. at ¶ 23.) Plaintiff claims that pursuant to the terms of the Loan Documents, Defendant is obligated to repay immediately all of ACI's debt obligations. (Id.)

Plaintiff asserts that it has authority to enforce the Loan Documents in light of its merger with National City Bank and the resulting succession to all of its rights under the Loan Documents. (Id. at ¶ 22.) On July 8, 2010, Plaintiff sent ACI a letter, and copied ACI's and Defendant's counsel. The letter informed ACI that it was in default of the Revolving Credit, Term Loan and Security Agreement. (Id. at ¶ 24.) Plaintiff claimed that ACI was in default for its failure to comply with the covenants set forth in Sections 6.5 and 7.6 of the Agreement. (Id.; see also July 8 Letter, Am. Compl. Ex. E.) Section 6.5 requires ACI to "cause to be maintained as of the end of each fiscal quarter, commencing with the fiscal quarter ending October 31, 2009, a Fixed Charge Coverage Ratio of not less than 1.1 to 1 calculated for the trailing twelve month period then ended." (Am. Compl. ¶ 24 (citing Revolv. Credit Agreement § 6.5).)*fn2 Pursuant to Section 7.6, ACI agreed not to "contract for, purchase or make any expenditure or commitments for Capital Expenditures in any fiscal year in the aggregate amount for all Borrowers in excess of $850,000." (Am. Compl. ¶ 26 (citing Revolv. Credit Agreement § 7.6).) Plaintiff claims that ACI is in default "for failing to maintain the requisite Fixed Charge Ratio as required under the Agreement and for making prohibited expenditures and commitments in violation of Section 7.6 of the Agreement." (Id. at ¶ 27.)

On June 30, 2010, ACI sent a Compliance Certificate to Plaintiff, which stated, in relevant part, that "[ACI] certifies that it is in compliance with the aforementioned sections of the loan agreement except Section 6.5. Fixed Coverage Ratio is less than 1.0 for the trailing 12 months. [ACI] attributes part of this to year[-]end journal entries being combined into January 2010." (Am. Compl. ¶ 28 (citing Compliance Cert., Compl. Ex. F).)*fn3

On March 23, 2011, Plaintiff sent ACI a letter stating that the defaults identified in the July 8, 2010 letter had continued, that ACI failed to deliver its projections for the fiscal period ending January 31, 2012 as required by the Revolving Credit, Term Loan and Security Agreement, and that Plaintiff, pursuant to Section 3.1 of the Agreement, was increasing the rate of interest on the obligations to the default rate as defined in the Agreement. (Am. Compl. ¶ 31.) This letter also stated Plaintiff's intent to charge ACI's account $5,000 per day until the earlier of (i) payment in full of the unpaid default interest or (ii) receipt by Plaintiff of the Undelivered Projections in a way that complied with the Agreement. (Id. at ¶ 32.) Plaintiff asserts that it has loaned to ...


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