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NEW BANK OF NEW ENG. v. TORONTO-DOMINION

July 16, 1991

NEW BANK OF NEW ENGLAND, N.A., PLAINTIFF,
v.
THE TORONTO-DOMINION BANK, PROVIDENT NATIONAL BANK, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND THE TORONTO-DOMINION BANK TRUST COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Sweet, District Judge.

OPINION

The defendants The Toronto-Dominion Bank ("TD Bank"), Provident National Bank ("Provident"), The Prudential Insurance Company of America ("Prudential") and The Toronto-Dominion Bank Trust Company ("TD Trust") have moved under Rule 56, Fed.R.Civ.P. for summary judgment dismissing the complaint of plaintiff New Bank of New England, N.A. ("NBNE"), one of four institutional lenders under a syndicated loan agreement (the "Credit Agreement"). For the reasons set forth below the motion is granted, and the complaint is dismissed.

Prior Proceedings

The complaint in this action was filed by NBNE on February 6, 1991, and the instant motion was heard and submitted on March 26, 1991.

The Facts

The facts as found here are, except as otherwise noted, undisputed by the parties.

NBNE is a bridge bank chartered by the Office of the Comptroller of the Currency under 12 U.S.C. § 1821(n) with its principal place of business in Boston, Massachusetts. NBNE is the successor of Bank of New England, N.A. ("BNE"), which has been placed in receivership by the Comptroller of the Currency.

TD Bank is a Canadian chartered bank with its principal place of business at Toronto, Ontario, licensed to and doing business in the State of New York with offices at 31 West 52nd Street, New York, New York. TD Trust is a New York corporation with its principal place of business at 42 Wall Street, New York, New York. Provident is a national banking association with its principal place of business in Philadelphia, Pennsylvania. Prudential is a New Jersey mutual insurance company with its principal place of business in Newark, New Jersey.

On August 25, 1988, Noble Broadcast Group, Inc. ("Noble"), the borrower, entered into the Credit Agreement with the four institutional lenders, BNE, TD Bank, Provident and Prudential (the "Lenders").

The Credit Agreement states that neither that Agreement, any Note, or any terms of the Agreement or Note may be amended, supplemented or modified "without the written consent of all the lenders" if "such amendment, supplement or modification shall (a) extend the maturity of any Note or any installment thereof, or reduce the rate or extend the time of payment of interest thereon. . . ." (Section 13.1).

The Credit Agreement defines certain occurrences as constituting an "Event of Default." One such occurrence, defined in § 11.1(a), is that Noble:

  shall fail to pay any interest or principal
  payment on any Note when due in accordance with
  the terms thereof or hereof; or [Noble] shall
  fail to pay any other amount required to be paid
  hereunder within five Business Days after any
  such amount becomes due in accordance with the
  terms hereof.

In the event of such a default, the Majority Lenders, by notice of default to Noble, "may" declare all amounts owing under the Credit Agreement and Notes immediately due and payable and, upon such acceleration, "may" enforce payment and exercise all their other rights and remedies (§ 11.1).

The term "Majority Lenders" is defined as "Lenders holding more than 50% of the aggregate unpaid principal amount of the Notes. . . ." (§ 1 at p. 9).

The Credit Agreement also provides for the Lenders to waive an Event of Default, but specifically states at § 11.2 that "the consent of all Lenders shall be required to waive an Event of Default under Section 11.1(a). . . ."

Section 13.10 of the Credit Agreement specifies that California law shall govern all disputes arising under the Agreement.

At the same time that it signed the Credit Agreement, Noble pledged its stock in its subsidiaries as collateral to secure its indebtedness, by means of a Security and Pledge Agreement (the "Pledge Agreement"). In addition, one of Noble's subsidiaries pledged its rights under a sales agency agreement as collateral to secure its guaranty of a portion of Noble's indebtedness, by means of a Security Agreement (the "Subsidiary Agreement").

Also at that same time, on August 25, 1988, the Lenders along with two other creditors of Noble (collectively, the "Creditors") and TD Trust as agent for all of the Creditors entered into an Intercreditor Agreement in connection with the Credit Agreement. Among other things, the Intercreditor Agreement contained ยง 9(d), ...


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