United States District Court, E.D. Pennsylvania
Warren Hill, LLC (“Warren Hill”) brings this
diversity action under Illinois law for breach of contract,
declaratory relief and an accounting against defendant SFR
Equities, LLC (“SFR”). Warren Hill sold to SFR
its membership interest in an Illinois limited liability
company named Vendor Assistance Program, LLC
(“VAP”). Warren Hill claims SFR breached the
contract that governed the sale. Specifically, Warren Hill
claims SFR underpaid it under the provisions of their
Membership Interest Purchase Agreement (“MIPA”).
The court has determined liability in favor of Warren Hill.
Before the court presently is the motion of Warren Hill for
summary judgment on damages and interest under Rule 56 of the
Federal Rules of Civil Procedure.
Rule 56 of the Federal Rules of Civil Procedure, summary
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). A dispute is genuine
if the evidence is such that a reasonable factfinder could
return a verdict for the nonmoving party. See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). We view
the facts and draw all inferences in favor of the nonmoving
party. See In re Flat Glass Antitrust Litig., 385
F.3d 350, 357 (3d Cir. 2004).
judgment is granted where there is insufficient record
evidence for a reasonable factfinder to find for the
nonmovant. See Anderson, 477 U.S. at 252. “The
mere existence of a scintilla of evidence in support of the
[nonmoving party]'s position will be insufficient; there
must be evidence on which the jury could reasonably find for
[that party].” Id. In addition, Rule 56(e)(2)
provides “[i]f a party fails to properly support an
assertion of fact or fails to properly address another
party's assertion of fact as required by Rule 56(c), the
court may . . . consider the fact undisputed for the purposes
of the motion.” Fed.R.Civ.P. 56(e)(2).
begin with a summary of the circumstances that resulted in
this litigation. The state of Illinois does not pay its debts
on time. As a way of ensuring that Illinois vendors can be
paid for the services rendered or goods supplied to Illinois,
the state established the Vendor Payment Program
(“VPP”) in 2011. Under the VPP, Illinois permits
third parties to purchase accounts receivable from its
vendors at 90% of their face value. In order to participate
in the VPP, the third-party purchasers must demonstrate a
financial ability to fund the purchase of receivables and
commit a minimum purchase amount based on the needs of the
VPP. If the third parties meet these and other requirements
under Illinois law, they are designated “Qualified
Purchasers” and may participate in the VPP.
a “Qualified Purchaser” under the VPP. In this
capacity, VAP purchases accounts receivable from vendors
through previously established trusts. VAP holds the accounts
receivable in accordance with management agreements with the
trusts. To finance the purchase of vendor receivables, the
trusts borrow funds from a lending bank. VAP indemnifies the
loans to the trusts and is ultimately responsible for
ensuring the lending banks are repaid.
Illinois finally pays the accounts receivable, it pays the
trusts. The trusts repay the loans used to purchase the
receivables with interest, and Illinois's vendors receive
their remaining 10%.
profit to VAP is possible because when Illinois finally
satisfies the accounts receivable, it does so with
substantial interest penalties. These penalties are greater
than the interest the trusts pays to the lending banks.
this profit, the trusts pay “Trust Fee Income”
and “Trust Certificate Income.” The trusts pay
VAP “Trust Fee Income” pursuant to the trust
agreements for tasks performed in its capacity as manager.
For example, VAP organizes the financing of the trusts with
the lending banks and locates receivables to purchase.
trusts pay “Trust Certificate Income” to the
holders of the trust certificates. Trust certificates represent the
beneficial interest in the trusts. “Trust Certificate
Income” is the spread which remains after all related
fees and expenses are paid and the bank loans with interest
2016, Warren Hill owned 33.246% of the membership interest in
VAP. Warren Hill sold its membership interest to SFR in
accordance with the terms of a Membership Interest Purchase
Agreement (“MIPA”) which became effective January
1, 2016. Germane to this motion, in addition to a lump sum at
closing, SFR agreed to pay Warren Hill a portion of VAP's
income for 2016, 2017, and 2018.
time of the sale, VAP held the trust certificates. VAP
received therefore both “Trust Fee Income” as
manager of the trusts and “Trust Certificate
Income” as holder of the trust certificates. In 2017,
the management of VAP created Bluestone Capital Markets
(“BCM”) which shares a CEO and board of managers
with VAP. VAP transferred the trust certificates to BCM for
March 2018, Warren Hill brought this action, claiming breach
of contract and seeking an accounting under the terms of the
MIPA. The parties took discovery and filed several motions
for summary judgment on the issue of liability, in which they
disputed the meaning of the MIPA. The court held oral
argument, ultimately determining liability in favor of Warren
Hill. The court decided the summary judgment motions, issued
two memorandum opinions in which it provided the reasoning
for its decisions, and denied SFR's motion for
reconsideration. It will not now ...