Opinion
Civil No. 1:18-CV-01960
2020-05-26
MIDWEST BANK, Plaintiff, v. David H. GOLDSMITH, et al., Defendants.
Kirk B. Burkley, Bernstein-Burkley, P.C., Ronald L. Hicks, Jr., Porter Wright Morris & Arthur LLP, Pittsburgh, PA, Christopher D. Cathey, Porter Wright Morris & Arthur LLP, Cincinnati, OH, for Plaintiff. Martin J. Cerullo, Cerullo, Datte & Wallbillich, P.C., Pottsville, PA, for Defendants.
Kirk B. Burkley, Bernstein-Burkley, P.C., Ronald L. Hicks, Jr., Porter Wright Morris & Arthur LLP, Pittsburgh, PA, Christopher D. Cathey, Porter Wright Morris & Arthur LLP, Cincinnati, OH, for Plaintiff.
Martin J. Cerullo, Cerullo, Datte & Wallbillich, P.C., Pottsville, PA, for Defendants.
MEMORANDUM ORDER
JENNIFER P. WILSON, United States District Court Judge
Before the court in this breach of contract action is a motion to appoint a receiver filed by Plaintiff Midwest Bank. (Doc. 106.) For the reasons that follow, the motion is denied.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The facts provided in this section are provided for the purpose of resolving Midwest's motion to appoint a receiver only. This section shall not be construed as making a factual finding on any fact as it pertains to Midwest's pending motion for summary judgment or for any other purpose in this litigation other than resolving the motion to appoint a receiver.
Defendant Fayette Thermal, LLC ("Fayette Thermal") is a Pennsylvania corporation that provides steam power to the Pennsylvania Department of Corrections ("DOC") under an agreement between Fayette Thermal and the DOC that was originally signed in 2000. (Doc. 117 ¶ 10.)
Although not directly at issue in this case, the agreement between Fayette Thermal and the DOC provides the backdrop for the present litigation, which arises from several other contracts involving Fayette Thermal and Defendant David H. Goldsmith ("Goldsmith"), Fayette Thermal's president. The first two of these contracts were signed on September 23, 2016, when M&T Bank agreed to make two separate loans to Fayette Thermal—one for $3,875,000, the other for $335,000. (See Docs. 124-1 to 124-6.) The remainder of the contracts were signed on February 28, 2018, and arose from a $5,000,000 loan that Midwest Bank made to OrangeHook, Inc. ("OrangeHook"). (See Doc. 79 ¶ 8.) To help secure OrangeHook's ability to pay the $5,000,000 owed to Midwest Bank, Goldsmith executed and delivered to Midwest Bank a commercial guaranty in which he agreed to guarantee OrangeHook's payment. (See Doc. 79 ¶ 10; Doc. 80 ¶ 10.) Fayette Thermal also guaranteed OrangeHook's payment by pledging its financial rights under its agreement with the DOC to Midwest Bank in the event of OrangeHook's default. (Doc. 79 ¶ 11; Doc. 80 ¶ 11.) The contract between Midwest Bank and Fayette provided, among other things, that
at any time after the occurrence of an Event of Default, continuing beyond any applicable cure period, Lender may, at its option, without notice, and without regard to the adequacy of security for the indebtedness hereby secured, either in person or by agent, with or without bringing any action or proceeding, or by a receiver to be appointed by a court at any time hereafter, enforce for its own benefit the Contract.
(See Doc. 9-2 at 3.) In addition to the guarantees from Goldsmith and Fayette Thermal, the OrangeHook loan was also backed by a mortgage on a property owned by a third party in Westmoreland County, Pennsylvania. (See Transcript of Oral Argument at 10:7–24.)
At the court's request, the assigned court reporter provided an unofficial transcript of the oral argument that occurred on May 13, 2020. All citations to the transcript in this opinion are to the unofficial version.
On September 1, 2018, OrangeHook defaulted on its payment obligation to Midwest Bank. (Doc. 79 ¶ 13; Doc. 80 ¶ 13.) As a result of the default, Midwest Bank demanded satisfaction of the OrangeHook loan from Defendants Fayette Thermal and Goldsmith. (Doc. 79 ¶¶ 17, 26.) After neither Defendant satisfied its obligation to secure payment under the OrangeHook loan, Midwest Bank filed suit on October 10, 2018, naming as Defendants OrangeHook, Fayette Thermal, and Goldsmith. (Doc. 1.) Following the filing of this complaint, Midwest Bank purportedly sold a portion of its interest in the OrangeHook loan to an individual named Whitney Peyton ("Peyton") for $2,358,048. (Doc. 79 ¶ 14.)
On December 5, 2018, Midwest Bank filed a motion to appoint a receiver to manage the affairs of Fayette Thermal and secure Fayette Thermal's ability to make payments to Midwest Bank. (Doc. 9.) Midwest Bank then filed a motion to voluntarily dismiss OrangeHook from the case on December 10, 2018. (Doc. 10). United States District Judge John E. Jones, III granted the motion the following day. (Doc. 11.)
On August 22, 2019, Peyton executed a limited power of attorney appointing Midwest Bank as his attorney-in-fact to collect the sums due to him under the OrangeHook agreement. (Doc. 79 ¶ 15; Doc. 80 ¶ 15.) Midwest Bank then filed a motion for summary judgment against Goldsmith on August 26, 2019. (Doc. 53.) M&T Bank filed a motion to intervene in the case on September 27, 2019. (Doc. 63.) Judge Jones granted the motion on September 30, 2019. (Doc. 68.) On October 31, 2019, Midwest Bank filed a motion to amend its complaint, seeking to add Peyton as a named plaintiff in the case. (Doc. 76.)
Judge Jones denied Midwest Bank's motion for summary judgment on November 1, 2019. (Doc. 77.) Judge Jones concluded that summary judgment was inappropriate because there were genuine issues of material fact as to (1) whether the initial payment made by Peyton to Midwest Bank was intended to purchase a portion of the OrangeHook loan or was instead intended to pay part of the loan on OrangeHook's behalf; (2) the amount of money that Midwest Bank was seeking; and (3) whether Goldsmith could be held liable for late fees. (Id. at 6–9.) Given these factual issues, the court declined to decide whether Midwest Bank was entitled to judgment as a matter of law and denied the motion. (Id. at 9–10.)
Following the denial of Midwest Bank's motion for summary judgment, Judge Jones granted Midwest Bank's motion to amend its complaint on November 18, 2019, and Midwest Bank filed its amended complaint on the same date. (Docs. 78–79.) Later that day, the case was reassigned from Judge Jones to the undersigned pursuant to a verbal order from Chief United States District Judge Christopher C. Conner. On December 2, 2019, Defendants answered Midwest Bank's amended complaint. (Doc. 80.) Fact discovery then concluded on January 31, 2020. (See Doc. 84.)
In February 2020, Midwest Bank acquired M&T Bank's ownership interest in the loans M&T Bank had given to Fayette Thermal in September 2016. (See Doc. 124 ¶ 30.) On February 3, 2020, Midwest Bank filed a renewed motion for summary judgment, seeking summary judgment against both Fayette Thermal and Goldsmith. (Doc. 86.) That motion, a related motion to strike, and a related motion for leave to file a sur reply are currently pending before the court. (See Docs. 86, 98, 113.) On March 4, 2020, Midwest Bank and M&T Bank filed a joint motion to dismiss M&T Bank from the case based on Midwest Bank having acquired its interest in the relevant loans. (Doc. 90.) The court granted that motion and dismissed M&T Bank on March 10, 2020. (Doc. 92.)
Midwest Bank filed the instant motion to appoint a receiver along with a supporting brief on April 17, 2020. (Docs. 106–07.) As a result of that motion being filed, the court denied Midwest Bank's previously filed motion to appoint a receiver as moot on April 20, 2020. (Doc. 110.) Defendants opposed the renewed motion to appoint a receiver on April 24, 2020, and Midwest Bank filed a reply brief on April 29, 2020. (Docs. 116, 121.)
Midwest Bank filed an unopposed motion for leave to file a supplemental complaint on April 28, 2020, seeking to add allegations based on the loans it acquired from M&T Bank. (Doc. 118.) The court granted the motion on April 30, 2020, and Midwest Bank's supplemental complaint was filed the same day. (Docs. 123–24.)
The court conducted oral argument on Midwest Bank's motion to appoint a receiver on May 13, 2020. Because briefing and argument on the motion have concluded, the motion is now ripe for the court's disposition.
JURISDICTION
This court has jurisdiction under 28 U.S.C. § 1332, which allows a district court to exercise subject matter jurisdiction where the parties are citizens of different states and the amount in controversy exceeds $75,000.
FEDERAL LAW GOVERNS THE MOTION TO APPOINT RECEIVER
At the outset, the court must address a dispute between the parties over what law governs Midwest Bank's motion to appoint a receiver. Midwest Bank asserts that federal law governs the appointment of a receiver in a diversity action, see Doc. 121 at 8, while Defendants argue that choice of law clauses in the parties’ contracts require the court to apply Minnesota law. (Doc. 116 at 4–5.) This choice-of-law dispute is confined to the motion to appoint a receiver, as the parties agree that the choice-of-law clauses in the parties’ contracts require the application of state law to the substantive breach of contract issues in the case. (See Doc. 77 at 7 n.3.)
The contracts that were originally signed between Midwest Bank and the Defendants require the court to apply Minnesota law, while the contracts that were originally signed between M&T Bank and the Defendants require the court to apply Pennsylvania law. For purposes of the current motion, it suffices to say that the substance of the parties’ contractual dispute is governed by state law. The interplay between Minnesota law and Pennsylvania law will be addressed in more detail at a later date when the court addresses Midwest Bank's pending motion for summary judgment.
The court begins its analysis of the choice-of-law issue with Federal Rule of Civil Procedure 66, which specifies that the Federal Rules "govern an action in which the appointment of a receiver is sought or a receiver sues or is sued." Fed. R. Civ. P. 66. Despite the language of Rule 66, controlling case law in this circuit does not provide a clear answer as to whether a federal court sitting in diversity should apply federal or state law when considering a motion to appoint a receiver.
The court's review of case law begins with Erie R.R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), which fundamentally altered the analysis a court must perform in determining whether federal or state law governs a dispute. See Emil R. Berg, Law Governing Appointment of Receiver in Federal Diversity Action , 44 A.L.R. Fed. 2d 241 § 1 (2010) (noting that "cases decided prior to Erie are no longer germane" to discussion of which law governs appointment of a receiver). Under Erie and its progeny, federal courts sitting in diversity "are to apply state substantive law and federal procedural law." Hanna v. Plumer , 380 U.S. 460, 465, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (citing Erie , 304 U.S. at 64, 58 S.Ct. 817 ).
The first Third Circuit case addressing which law governs the appointment of a receiver after Erie was Maxwell v. Enter. Wall Paper Mfg. Co. , 131 F. 2d 400 (3d Cir. 1942), in which the court considered the appointment of a receiver in a dispute between a Pennsylvania corporation and one of its shareholders. Id. at 401–02. The court sua sponte raised the issue of whether federal law or Pennsylvania law governed the appointment of a receiver and concluded that federal law governed because the "form of equitable relief a plaintiff is to be given by a federal court for infringement of his rights" is "a matter to be determined by federal law, not state decisions." Id. at 402. Nevertheless, the court found that there was no relevant conflict between federal law and Pennsylvania law with regard to the appointment of a receiver in the case before it. Id. at 402–03 ("In this case, however, we do not think that there is any difference between the principles determining the appointment of receivers as enunciated by Pennsylvania courts and those found in the federal decisions cited below.").
The Third Circuit next considered which law governed the appointment of a receiver in Mintzer v. Arthur L. Wright & Co. , 263 F.2d 823 (3d Cir. 1959), in which a group of plaintiffs sued a Philadelphia brokerage house over alleged improprieties committed by one of its employees and subsequently sought the appointment of a receiver to preserve the brokerage house's assets. Id. at 824. The court considered the choice-of-law issue in light of Erie and reasoned that "[t]he concept of equitable remedial rights ... can be thought of as merged into or absorbed by what is currently regarded as the area of substantive rights." Id. at 825. The court therefore concluded: "[w]e see no bar to the appointment of a receiver if the law of Pennsylvania would grant the appointment." Id. Although this language seemed to conflict somewhat with the court's earlier holding in Maxwell , two of the three judges that decided Mintzer filed a concurring opinion in which they clarified: "we do not feel bound by state law in determining whether an equitable remedy is to be given or whether a plaintiff is relegated to his remedies at law. We have said this several times and are not departing from it now." Id. at 826 (Goodrich, J., concurring).
Although Mintzer has never been expressly overruled, subsequent Third Circuit decisions have called into question the court's holding that the appointment of a receiver is governed by state law. In Tanzer v. Huffines , 408 F.2d 42 (3d Cir. 1969), for example, the court applied federal law in deciding whether to appoint a receiver in a diversity action, with no discussion of whether state or federal law properly governed the issue. See id. at 43–46. Similarly, in an unpublished decision in KeyBank Nat'l Ass'n v. Fleetway Leasing Co. , 781 F. App'x 119, 122 n.3 (3d Cir. 2019), the court acknowledged the argument that Mintzer was "simply irrelevant" to the choice-of-law discussion because it had applied state law rather than federal law, but concluded that Mintzer could still provide general principles to guide the court's discussion because there was not a "difference between the principles determining the appointment of receivers as enunciated by Pennsylvania courts and those found in the federal decisions." Id. (quoting Maxwell , 131 F.2d at 402–03.)
The court declines to follow Mintzer for four reasons. First, as noted above, the Third Circuit's subsequent decisions in Tanzer and KeyBank call into question the court's holding that state law governs the appointment of a receiver. Second, Judge Goodrich's concurring opinion in Mintzer stated that the Third Circuit was not bound by state law "in determining whether an equitable remedy is to be given or whether a plaintiff is relegated to his remedies at law," Mintzer , 263 F.2d at 826 (Goodrich, J., concurring), which suggests that, while the court in Mintzer was applying Pennsylvania law to the facts of that case, its decision was not meant to conflict with earlier decisions of the court—including Maxwell —holding that the decision of whether to grant equitable relief was based on federal law. See id. ; see also Berg, supra (arguing that Judge Goodrich's concurring opinion limited the scope of the Mintzer holding). Third, the clear language of Rule 66 specifies that the Federal Rules of Civil Procedure "govern an action in which the appointment of a receiver is sought or a receiver sues or is sued," Fed. R. Civ. P. 66, and the Supreme Court has held that a district court must apply the Federal Rules of Civil Procedure when they expressly govern an action. Hanna , 380 U.S. at 471, 85 S.Ct. 1136. Finally, in addition to the subsequent Third Circuit decisions that conflict with Mintzer , several other circuit courts have also held that the decision of whether to appoint a receiver is governed by federal law. See Canada Life Assur. Co. v. LaPeter , 563 F.3d 837, 843 (9th Cir. 2009) ; Myles v. Sapta , 139 F.3d 912 (10th Cir. 1998) ; Nat'l P'Ship Inv. Corp. v. Nat'l Housing Dev. Corp. , 153 F.3d 1289, 1292 (11th Cir. 1998) ; Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc. , 999 F.2d 314, 316 (8th Cir. 1993) ; Chase Manhattan Bank, N.A. v. Turabo Shopping Ctr. , 683 F.2d 25, 26 (1st Cir. 1982).
This court is not alone in declining to follow Mintzer. Indeed, several district courts in this circuit have either rejected Mintzer outright or simply applied federal law without discussion of Mintzer . See, e.g., Wilmington Tr., Nat'l Ass'n v. 1800 16th St., LLC , No. 19-CV-02601, 2020 WL 703653, at *2 (E.D. Pa. Feb. 11, 2020) (relying on Rule 66 and case law from other circuits to apply federal law); MSCI 2006-IQ11 Logan Boulevard Ltd. P'Ship v. Greater Lewistown Shopping Plaza, L.P. , No. 4:16-CV-02090, 2017 WL 485958, at *1 (M.D. Pa. Feb. 6, 2017) (applying federal law under Maxwell ); Mfrs. & Traders Tr. Co. v. Minuteman Spill Response, Inc. , 999 F. Supp. 2d 805, 816 (W.D. Pa. 2013) (relying on Rule 66 for proposition that federal law governs appointment of receiver); Wells Fargo Bank, N.A. v. CCC Atl., LLC , 905 F. Supp. 2d 604, 610 & n.8 (D.N.J. 2012) (applying federal law and declining to follow Mintzer based on its failure to cite Maxwell ); Carvel v. Griffin , No. 07-CV-00273, 2008 WL 4922432, at *8 (D. Del. Nov. 18, 2008) (applying federal law without choice-of-law discussion). Accordingly, the court declines to follow Mintzer and concludes that a federal court sitting in diversity must apply federal law when determining whether to appoint a receiver. See Fed. R. Civ. P. 66 ; Maxwell , 131 F. 2d at 402.
DISCUSSION
Under federal law, the decision of whether to appoint a receiver is left to the discretion of the district court. Maxwell , 131 F.2d at 403. The party moving for the appointment of a receiver has the burden to establish that such an action is necessary. Bank of Am., N.A. v. B.R.M. Parkway Ctr. Inc. , No. 12-CV-00172, 2012 WL 12906570, at *4 (D.N.J. Dec. 19, 2012) ; Berger v. Weinstein , No. 07-CV-00994, 2008 WL 191172, at *12 (E.D. Pa. Jan. 23, 2008). To satisfy its burden, the moving party has to show that it "has some legally recognized right in that property that amounts to more than a mere claim against the defendant." Wells Fargo Bank, N.A. ex rel. Morgan Stanley Capital Inc., Commercial Mortg. Pass-Through Certificates, Series 2006-IQ12 v. Lichter Gateway IV, LLC , No. 17-CV-02036, 2017 WL 5957072, at *5 n.9 (D.N.J. Dec. 1, 2017). The appointment of a receiver is an "extraordinary" and "drastic" remedy that "is not to be resorted to if milder measures will give the plaintiff ... adequate protection for [its] rights." Maxwell , 131 F.2d at 403.
Although there is no set formula for determining when a receiver should be appointed, a federal court should consider the following factors in conducting such an analysis:
(1) the probability of the plaintiff's success in the action;
(2) the possibility of irreparable injury to the plaintiff's interests in the property;
(3) the inadequacy of the security to satisfy the debt;
(4) the probability that fraudulent conduct has occurred or will occur to frustrate the plaintiff's claim;
(5) the financial position of the debtor;
(6) the imminent danger of the property being lost, concealed, injured, diminished in value, or squandered;
(7) the inadequacy of available legal remedies;
(8) the lack of a less drastic equitable remedy; and
(9) the likelihood that appointing a receiver will do more harm than good.
Mfrs. & Traders Tr. Co. , 999 F. Supp. 2d at 816 (quoting Comerica Bank v. State Petroleum Distribs., Inc. , No. 3:08-CV-00678, 2008 WL 2550553, at *4 (M.D. Pa. June 2, 2008) ). Because a receiver " ‘unquestionably interferes’ with [a defendant's] right to otherwise control [its] property, a district court should appoint a receiver only ‘in cases of necessity, and when the plaintiff clearly and satisfactorily shows that an emergency exists and the receiver is needed to protect the property interests of the plaintiff.’ " Id. at 817 (first quoting Mintzer , 263 F.2d at 825, then quoting Comerica Bank , 2008 WL 2550553, at *4 ). Midwest Bank argues that a receiver should be appointed in this case because absent third-party intervention, there is an imminent danger that the proceeds of Fayette Thermal's contract with the DOC will be wasted, causing irreparable harm to Midwest Bank. (Doc. 107 at 12.) Midwest Bank further argues that Defendants’ actions illustrate fraudulent intent that supports the appointment of a receiver. (Id. at 13.) Finally, Midwest Bank argues that a receiver should be appointed because Fayette Thermal "agreed to the appointment of a receiver in the event of default." (Id. at 14.)
Defendants argue that Fayette Thermal did not agree to the appointment of a receiver and that instead, the language of the contract merely "suggests that Plaintiff may seek the appointment of a receiver by applying to the court." (Doc. 116 at 9.) Defendants then argue that the equitable remedy of appointing a receiver is inappropriate because Midwest Bank bought its way into a default by acquiring the M&T loans and therefore seeks an equitable remedy with unclean hands. (Id. at 10–11.)
Beyond those arguments, Defendants additionally argue that the factors the court should consider in appointing a receiver do not support appointment of a receiver because (1) genuine issues of material fact make it unclear whether Plaintiff has a likelihood of success on the merits; (2) Midwest Bank has not demonstrated a likelihood of irreparable injury; (3) Midwest Bank has not demonstrated that Fayette Thermal's assets are inadequate to cover the debt; (4) there is no evidence of fraudulent intent by Fayette Thermal; (5) there is no imminent danger of Fayette Thermal's property being lost, concealed, injured, diminished in value, or squandered; (6) there are less drastic remedies than the appointment of a receiver available; and (7) appointment of a receiver would do more harm than good. (Id. at 12–14.)
Midwest Bank argues in reply that the factors do support the appointment of a receiver because (1) any issues of fact that may exist pertain only to the OrangeHook loans and a receiver can still be appointed based on the M&T loans; (2) Midwest Bank suffers an irreparable injury every month that the proceeds of Fayette Bank's DOC contract are not rerouted to Midwest Bank; (3) Fayette Thermal does not have sufficient assets to cover the debt, and, even if it does, the parties’ contract allows Midwest Bank to "seek the appointment of a receiver without having to prove the inadequacy of the security"; (4) Fayette Thermal has made material misrepresentations and diverted funds from the DOC contract, which evidences fraudulent intent; (5) Fayette Thermal has failed to make payments under its loans, which obviates the need for Midwest Bank to prove that Fayette Thermal is financially insolvent; (6) Fayette Thermal diverting proceeds from the DOC contract creates a danger of its assets being lost; (7) the possible existence of other remedies does not change the fact that the parties agreed that Midwest Bank could pursue the appointment of a receiver; and (8) appointment of a receiver would not do more harm than good. (Doc. 121 at 9–12.)
Turning to Defendants’ other arguments, Midwest Bank argues that Defendants’ unclean hands argument should be disregarded because Fayette Thermal has defaulted on its loan obligations, which makes it immaterial whether Midwest Bank has bought its way into the default. (Id. at 15–16.) Midwest Bank then argues that Defendants’ argument regarding the language of the parties’ contract is without merit because the clear language of the contract allows Midwest Bank to seek the appointment of a receiver. (Id. ) Having considered the factors relevant to the appointment of a receiver and the parties’ written and oral arguments, the court concludes that Midwest Bank has failed to meet its burden to show that a receiver should be appointed. To begin with, considering the fact that a motion for summary judgment has already been denied and another such motion is pending, see Docs. 77, 86, it is not clear that Midwest Bank has a likelihood of success on the merits in this action.
Midwest Bank has also failed to show that it will suffer irreparable injury if a receiver is not appointed or that Fayette Thermal's assets are inadequate to satisfy its debts. As both parties acknowledged at oral argument, no discovery has been done to determine the total value of Fayette Thermal's assets. (See Transcript of Oral Argument at 36–37, 44–45.) Absent such discovery, the court cannot conclude that Midwest Bank will suffer irreparable injury, because the total value of Fayette Thermal's assets is pertinent to the question of whether Fayette Thermal can satisfy any judgment that Midwest Bank might obtain on the merits.
Similarly, Midwest Bank has failed to establish that available legal remedies are inadequate to protect its interests. The possibility exists that Midwest Bank will succeed on the merits of its claims and obtain a monetary judgment against Defendants, and, as previously mentioned, Midwest Bank has failed to show that Fayette Thermal has inadequate assets to satisfy such a judgment. Midwest Bank has therefore failed to show how litigation on the merits of its claims is inadequate to protect its interests.
The court is particularly reluctant to appoint a receiver in a case like this one where all parties agree on the importance of Fayette Thermal maintaining its status as an operating business providing steam power to the DOC. (See, e.g. , Transcript of Oral Argument at 18–19.) Because the appointment of a receiver would "unquestionably interfere" with Fayette Thermal's ability to run its business, Mfrs. & Traders Tr. Co. , 999 F. Supp. 2d at 817, the court will exercise particular caution since such interference could damage the effective management of Fayette Thermal's business.
Moreover, the court is mindful that a receiver should only be appointed in cases where a plaintiff "satisfactorily shows that an emergency exists." Id. at 816. Although Midwest Bank asserts that this case presents a situation where the appointment of a receiver is necessary, its conduct during this litigation shows a lack of urgency in seeking such relief.
Midwest Bank first moved for the appointment of a receiver on December 5, 2018. (Doc. 9.) Ten months later, the parties entered into a joint stipulation agreeing that "no other responses, briefs or other filings" related to the motion to appoint a receiver "shall be made or required to be filed by any party until Plaintiff submits a letter with the Court advising that it has completed all requisite discovery and desires to move forward with a hearing or other resolution of the Motion." (Doc. 75.) Fact discovery then concluded on January 31, 2020, see Doc. 84, but Midwest Bank did not take any action with regard to its motion to appoint a receiver until the court prompted it to do so three weeks later, at which point Midwest Bank filed a court-ordered status report on the motion. (Docs. 89, 91.) The court then convened a status conference with the parties on March 25, 2020, during which Midwest Bank sought and obtained leave to file a new motion for appointment of a receiver rather than pressing its previously filed motion which had then been pending for approximately fifteen months. (See Docs. 99–100.) The new motion for appointment of a receiver was then filed on April 17, 2020. (Doc. 106.)
Thus, while Midwest Bank's new motion for appointment of a receiver has been pending for a relatively short period of approximately one month, it has been approximately seventeen months since Midwest Bank first sought appointment of a receiver, and during that time Midwest Bank has shown a clear lack of urgency on the issue of whether a receiver should be appointed. This lack of urgency undercuts Midwest Bank's assertion that the case presents an emergency situation warranting the appointment of a receiver. Cf. Doe v. Banos , 713 F. Supp. 2d 404, 415 n.15 (D.N.J. 2010) ("In any event, John Doe's lack of urgency as reflected in how this motion was brought before the Court undermines his claim of immediate and irreparable harm to his First Amendment rights, a necessary finding for pre-judgment relief. This is reason alone to deny the relief sought here."); Quad/Tech, Inc. v. Q.I. Press Controls B.V. , 701 F. Supp. 2d 644, 657 (E.D. Pa. 2010) (finding that plaintiff's delay in seeking preliminary injunctive relief "undercut[ ] the urgency that forms the cornerstone of injunctive relief" and supported a finding that plaintiff had not suffered irreparable harm).
On a related note, the instant motion to appoint a receiver does not allege that Fayette Thermal's financial condition has worsened during the pendency of this action. Absent an allegation that the financial situation has become more dire, and given Midwest Bank's lack of urgency, this case does not appear to present an emergency situation that would warrant appointment of a receiver.
Finally, the court acknowledges Midwest Bank's argument that Fayette Thermal has consented to the appointment of a receiver, but that argument does not change the court's conclusion that appointment of a receiver is not warranted. To begin with, the court disagrees with Midwest Bank's contention that the language of the contract evidences Fayette Thermal's consent to the appointment of a receiver. The contract provides as follows:
[A]t any time after the occurrence of an Event of Default, continuing beyond any applicable cure period, Lender may, at its option, without notice, and without regard to the adequacy of security for the indebtedness hereby secured, either in person or by agent, with or without bringing any action or proceeding, or by a receiver to be appointed by a court at any time hereafter, enforce for its own benefit the Contract.
(See Doc. 9-2 at 3.) The court interprets this contract as giving Midwest Bank the right to seek the appointment of a receiver in court; it does not interpret it as Fayette Thermal consenting to the appointment of a receiver.
Even assuming that the contract evidences Fayette Thermal's consent to the appointment of a receiver, however, the court still finds that the appointment of a receiver is not warranted. Although a nonmovant's consent to the appointment of a receiver weighs heavily in favor of appointment of a receiver, Stonebridge Bank v. Nita Props., LLC , No. 09-CV-05145, 2011 WL 2173771, at *2 (D.N.J. June 1, 2011), the ultimate decision of whether to appoint a receiver is left to the discretion of the district court. Maxwell , 131 F.2d at 403. Here, for the reasons set forth above, the court finds that appointment of a receiver is not warranted, regardless of whether Fayette Thermal has consented to such an action.
CONCLUSION
For the foregoing reasons, IT IS ORDERED that Midwest Bank's motion to appoint a receiver (Doc. 106) is DENIED WITHOUT PREJUDICE .
The denial of the motion is without prejudice to Midwest Bank filing a renewed motion for appointment of a receiver if Fayette Thermal's financial position changes or if there is some other material change to the financial circumstances of this case. The denial of the motion is also without prejudice to the parties independently agreeing to a limited receivership or a financial accounting of Fayette Thermal's assets.