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Citizens & Northern Bank v. Pembrook Pines Mass. Media, N.A., Corp.

United States District Court, Second Circuit

June 25, 2013

CITIZENS & NORTHERN BANK, Plaintiff,
v.
PEMBROOK PINES MASS MEDIA, N.A., CORP., and ROBERT J. PFUNTNER, Defendants.

Angela Z. Miller, Esq., William H. Baaki, Esq., Keith M. Brandofino, Esq., Phillips Lytle LLP, Buffalo, NY, for Plaintiff.

Camille W. Hill, Esq., Stephen A. Donato, Esq., Bond, Schoeneck & King, Syracuse, NY, for Defendants.

C. Bruce Lawrence, Esq., Boylan Code, Rochester, NY, for the Receiver.

DECISION & ORDER

CHARLES J. SIRAGUSA, District Judge.

INTRODUCTION

This matter is before the Court on a motion by the Court-appointed Receiver Richard A. Foreman for an Order:

(1) Approving payment of $104, 182.08 for reimbursement of expenses for services rendered between March 1, 2012, and September 30, 2012 ("First Interim Period");
(2) Approving the payment of any additional fees incurred by the Receiver in excess of the monthly budgeted allowance of $4, 405.19; and

(3) Approving a brokerage fee of $50, 000 for Richard A. Foreman Associates. See Proposed Order, filed October 19, 2012, ECF No. 99-4. In addition to the October 19 motion, the Receiver filed another motion on May 14, 2013, ECF No. 121, seeking the following:

(i) the fees, costs and expenses previously paid by the Receiver and reported in the Receiver's Reports, #3 through 10, inclusive;
(ii) the overage previously approved by this Court in the amount of $4, 405.19; and
(iii) the brokerage fee of $50, 000 incurred by the Receiver upon the Consultant's being the procuring cause of the Stalking Horse purchasers for the Receivership Assets and the execution of definitive agreements among the Receiver as Seller and the Stalking Horse Bidders as Buyers, which Agreements were approved by this Court; and

(iv) granting such other and further relief as is just and proper. Final Application of Richard A. Foreman as Receiver for Approval of Interim Compensation and Allowance of Additional Compensation and Reimbursement of Expenses ("Final Application") at 7, May 14, 2013, ECF No. 121.

Defendants filed papers on October 19, 2012, opposing only the brokerage fee of $50, 000, arguing that the fee is not due and payable under the terms of the brokerage agreement and that Richard A. Foreman Associates has already been fully compensated for its efforts in connection with the proposed sale of the Pembrook radio station assets. Defendants further maintain they are not parties to the brokerage agreement and the fee may not be paid from the funds deposited by Defendants with the Court[1] to satisfy the judgment in this case. Hill Decl. ΒΆ 2, Oct. 19, 2012, ECF No. 100. The Receiver filed a reply on November 7, 2012, ECF No. 108. For the reasons stated below, Mr. Foreman's request for a brokerage fee of $50, 000 is denied, but his applications are granted in all other respects.

BACKGROUND

The Court will presume familiarity with the facts of this case, and will only outline briefly the background and discuss only the documents relevant to the issue of whether a brokerage fee is due and payable.

Plaintiffs commenced this case in 2009 seeking a judgment against Defendants in the amount of $244, 554.61, plus late fees, costs, attorney fees and interest. Compl. at 11, Jul. 30, 2009, ECF No. 1. Defendants defaulted, and the Court entered judgment. Judgment, Sept. 17, 2010, ECF No. 7. Plaintiffs attempted to negotiate with Defendants for payment, but those discussions proved unfruitful. Defendants realized that since, the property against which the judgment could be executed involved licensed radio stations, they needed a Receiver who was familiar with, and could satisfy the requirements of the Federal Communications Commission ("FCC") to run the station while seeking a buyer. Thus, the Court appointed a receiver with credentials to satisfy the FCC requirements and who had the ability to seek a purchaser of the radio stations in order to satisfy the judgment.

In its Order filed on March 1, 2012, ECF No. 21, the Court appointed Richard A. Foreman, as Receiver, to perform, inter alia, the following essential functions:[2] (1) serve as Receiver over the assets designated in the Order; (2) use, lease, sell and convert in to money those assets in either a private or public sale, seeking Court approval of all leases and sales of property having a value of $100, 000 or more; and (3) pay himself fees and expenses out of the proceeds of up to $17, 500 per month. The Order further stated that to the extent that fees and expenses, subject to an accounting and final approval by the Court, could not be paid from operating funds, "Defendants are jointly and severally liable for the reasonable costs, fees and expenses of the Receiver incurred in connection with the performance of his duties as described [in this Order]...."

In its Amended[3] Order Approving Sale and Bidding Procedures, filed on August 24, 2012, ECF No. 72, the Court approved Mr. Foreman's sale and bidding procedures with respect to sale of the radio stations and set a sale date of September 27, 2012 at 2:30 PM. In his moving papers, Mr. Foreman proposed to sell the radio stations in a manner designed to maximize their value to a buyer at a minimum purchase price of $510, 000 for the Bath stations, to require the successful bidder to submit an application to the FCC for transfer of the license, and that,

[u]pon [c]losing, the Bath Purchase Price shall be directly payable as follows: (1) to the Receiver for unpaid costs/expenses of the Receiver through Closing, not to exceed $5, 000...; (2) to Richard A. Foreman Associates, Inc. for brokerage fees in the amount of ...

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