United States District Court, E.D. Pennsylvania
case arises from the refinancing of the mortgage loan on a
financially distressed shopping center. Plaintiff Red Star
Mortgage Corporation contends that it is entitled to payment
for arranging the refinancing because it introduced the
lender, Defendant Thorofare Capital, Inc., to Defendant Allen
Branch, who was allegedly working on behalf of the shopping
center's owner, Railyard Properties, LLC. Plaintiff seeks
to recover its payment based on claims of breach of contract,
unjust enrichment, quantum meruit, and conversion
against Defendants Allen Branch and Richard
“Rick” Jaramillo (a member of Railyard
Properties, LLC),  as well as claims for unjust enrichment,
quantum meruit, conversion, and tortious
interference with contractual relations against Defendant
Thorofare Capital, Inc.. All three Defendants have filed
motions for summary judgment in which they contend that Allen
Branch was not acting on behalf of Railyard Properties, LLC
when he was introduced to Thorofare, and Thorofare's
motion also seeks summary judgment on its a cross-claim and
third-party claims seeking indemnification, attorneys'
fees, and costs from Railyard's three principle members:
Jaramillo, and Third-Party Defendants Steven Duran and David
Duran. All three motions shall be granted.
claims arise from the 2014 refinancing of a mortgage loan on
Market Station at the Santa Fe Railyards (“Market
Station”), a financially troubled shopping center in
Santa Fe, New Mexico. Before describing the events that led
to the refinancing, it is useful to first describe the people
and entities involved in this case:
• Railyard Properties LLC
(“Railyard”) is a limited liability company
formed in April 2004 by Allen Branch, Rick Jaramillo
(“Jaramillo”), Steve Duran, David Duran, and
Marco Gonzales which has owned Market Station since its
creation, and which declared Chapter 11 bankruptcy in 2015.
• Defendant Xacattack LLC, f/k/a Renaissance
Properties, LLC (“Renaissance”) is a limited
liability company of which Allen Branch was the managing
member at all relevant times, which has no affiliation with
Railyard and owns no portion of Market Station. J.A. 180;
Allen Branch Aff. ¶ 10.
• Defendant Allen Branch was a founding member
of Railyard who sold his voting and principle membership
interest in Railyard in 2012. J.A. 147, 180.
• Defendant Richard “Rick” Jaramillo
(“Jaramillo”) is founding member of Railyard
who remained a principle member at all relevant times. J.A.
• Third-Party Defendants Steve Duran and David Duran
(the “Durans”) are founding members of
Railyard who remained members at all relevant times. J.A.
127, 236 • Defendant Thorofare Capital, Inc.
(“Thorofare”) is a private equity firm that
re- purchased the original mortgage loan on Market Station in
late 2014. J.A. 241.
• Plaintiff Red Star Mortgage Corporation
(“Red Star”) is a real estate financial
services company that attempted to arrange refinancing for
Market Station through negotiations with Allen Branch and
Jaramillo in 2012, and again with Allen Branch alone in 2013
at which time Red Star introduced him to Thorofare. J.A.
Original Financing of Market Station
2008, Railyard obtained a $14, 000, 000 loan from Market
Street Railway Properties, LLC (“MSRP”), a
subsidiary of Ambit Funding, LLC (“Ambit”), to
finance the development of Market Station in the historic
railyard section of Santa Fe (the “MSRP/Ambit
loan”). J.A. 95. Allen Branch, Steve Duran, and
Jaramillo signed the loan documents on behalf of Railyard,
and the loan was jointly guaranteed by Allen Branch, David
Duran, Elaine Duran (David's wife), Steve Duran, and
Jaramillo, pursuant to a Commercial Guaranty with MSRP. J.A.
Railyard secured Recreational Equipment, Inc.
(“REI”), a retailer of outdoor recreational
equipment and apparel, to serve as anchor tenant for Market
Station, many of the other units remained unleased and
Railyard soon had difficulty meeting its debt obligations to
MSRP. Meanwhile, Railyard suffered from internal disputes
among its members, including a lawsuit filed by Allen Branch
against the company in late 2010. J.A. 140. In an attempt to
resolve their dispute, Railyard purchased Allen Branch's
voting interest and all but 5% of his membership interest on
May 12, 2012. J.A. 145.
Red Star Solicits Railyard for Refinancing
selling his membership interest, Allen Branch continued to
work with Railyard as its realtor and in efforts to obtain
refinancing of the MSRP/Ambit loan throughout 2012. In
September of that year, Allen Branch made his first contact
with Red Star by responding to a mass e-mail advertising Red
Star's financial consulting and brokerage services. J.A.
169. Although he was no longer a voting or principle member
of Railyard at the time, he referred to the Market Street
property as “our” property and expressed an
interest in refinancing “our” loan in his
correspondence with Gary Polao, the President of Red Star.
J.A. 169. By October 2012, Allen Branch included Jaramillo
(who remained a principle member of Railyard) on several
email chains to provide further information about Market
Station's refinancing potential, and general terms
regarding potential refinancing of the MSRP/Ambit loan were
discussed. J.A. 356. These negotiations culminated with a
conference call between Polao, Allen Branch, and Jaramillo on
October 30, 2012. J.A. 356. No formal financing proposal ever
emerged from the negotiations, however, and although Allen
Branch and Polao continued to exchange sporadic emails
suggesting various alternative financing options for several
months, the negotiations stopped in March 2013. J.A. 170,
Allen Branch / Renaissance Engage with Red Star
same month that the initial negotiations with Red Star
stopped (March 2013), Allen Branch was terminated as
Railyard's realtor. Branch Aff. ¶ 5; By May 2013, he
stopped all contact with Railyard other than through his
lawsuit against the company. Branch Aff. ¶ 7; Jaramillo
Aff. ¶ 12; S. Duran Aff. ¶ 9; D. Duran Aff. ¶
July 2013, Allen Branch - now estranged from Railyard -
resumed his e-mail discussion about Market Station with
Polao. J.A. 173. These renewed discussions quickly yielded a
formal “Agreement for Financial Services” (the
“Red Star Agreement”), dated August 7, 2013,
between Red Star as the “Consultant” and
“Allen Branch and Renaissance Properties, LLC” as
the “Client.” J.A. 180. Allen Branch signed the
Red Star Agreement twice (once as an individual and once as
the “managing member” of Renaissance), and Polao
signed on behalf of Red Star; neither Railyard nor any of its
other members are mentioned in the document. J.A. 180. For
his part, Jaramillo does not appear on any of the July and
August 2013 e-mails between Allen Branch and Polao, and he
claims he had no contact with Polao after July 2013.
Jaramillo Aff. ¶ 9.
Star Agreement provided that Red Star would serve as the
consultant to find a lender and facilitate a $9, 000, 000
loan to finance Renaissance's re-purchase of the
MSRP/Ambit loan on the Market Station property. J.A. 180. In
return for a successful financing, Red Star would be entitled
to a commission of 1.5% of the loan principal, in addition to
a $2, 995 consulting fee. J.A. 180. The Red Star agreement
contained a clause which provided that:
Client agrees not to obtain financing from Lender/Investors
supplied by Consultant, either directly or through third
parties, without prior written consent of Consultant, for a
period of two (2) years from the date of this agreement
except through Consultant and that a separate agreement shall
be required for these services.
(the “Non-Circumvention Clause”). J.A. 180.
same day the Red Star Agreement was signed, Polao contacted
Eugene Rutenberg, a Senior Loan Analyst at Thorofare, and
introduced Allen Branch as the “borrower” and
“managing member of Renaissance Properties, LLC”
in relation to proposed financing for the re-purchase of a
commercial loan. J.A. 181, 199. That same day, Polao, Allen
Branch, and Rutenberg held a conference call to discuss the
financing. J.A. 180, 390. Following the call, Rutenberg
e-mailed Polao that Thorofare would consider the loan only if
Renaissance obtained $2-3 million in secondary financing from
MSRP/Ambit, and that the proposal needed “a lot of
work.” J.A. 200. Polao passed this information along to
Allen Branch the following day, along with a Proof of Funds
from Thorofare to facilitate negotiations with MSRP/Ambit.
J.A. 201. There is no evidence of any further communication
between Red Star, Thorofare, and Allen Branch, no formal
proposal or term sheet was produced, and Renaissance never
purchased the MSRP/Ambit loan. J.A. 390.
Polao claims that he informed Rutenberg that Red Star had a
consulting agreement with Renaissance during a phone call in
August 2013, the Red Star Agreement was not attached to any
of the e-mails in the record between Red Star and Thorofare.
Polao Aff. ¶ 14; J.A. 181-200. There is also no evidence
that Allen Branch communicated ...