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TCP Printing Co., LLC v. Enterprise Bank & Trust

United States District Court, E.D. Missouri, Eastern Division

September 29, 2017

TCP PRINTING CO., LLC, Plaintiff,
v.
ENTERPRISE BANK & TRUST, Defendant.

          FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

          JOHN A. ROSS TJNITED STATES DISTRICT JUDGE.

         This matter came before the Court on April 24 and 25, 2017 for a bench trial on Plaintiff TCP Printing Co., LLC (“TCP”)'s complaint against Defendant Enterprise Bank & Trust (“Enterprise”) for breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), conversion (Count III), and alternative claim for unjust enrichment (Count IV) (Doc. No. 1); and Enterprise's motion for summary judgment (Doc. Nos. 38, 48). Evidence was adduced and concluded.[1] A transcript was prepared and the parties submitted proposed findings of fact and conclusions of law. Having considered the pleadings, trial and deposition testimony, exhibits, and proposed findings of fact and conclusions of law submitted by the parties, the Court hereby makes and enters the following findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

         FINDINGS OF FACT

         1. At all times relevant to this action, Plaintiff TCP Printing Co., LLC (“TCP”), a Pennsylvania limited liability company, was a commercial printing company, whose sole member was Greg Bozzi (“Bozzi”).

         2. JPB Investments VI LLC (“JPB”), was a commercial printing and direct mail business located in Missouri, doing business as 601 Direct LLC (“601 Direct”). Paul Behrens (“Behrens”) was the sole owner and President of JPB.

         3. Defendant Enterprise Bank & Trust (“Enterprise”) is a Missouri chartered trust company with banking powers, and at all relevant times was JPB's senior lender holding a first priority security interest in all of JPB's collateral, namely 601 Direct inventory, equipment and accounts receivable.

         4. By February 2014, JPB was in financial distress, having already defaulted on three loans extended by Enterprise, and owed Enterprise over $1.9 million.

         5. Having acquired printing companies in the past as a way to grow his core business, Bozzi approached Behrens in March 2014 about purchasing JPB's assets, namely its equipment and customer base. It was Bozzi's testimony that TCP was only interested in JPB's equipment and customer base and had no intention of purchasing and running 601 Direct. (Transcript of Proceedings on April 24, 2017 (“Tr. 1”), Doc. No. 85 at 18:16-21; 21:18-22:3; 75:23-76:1).

         6. Between March and May 2014, TCP, Enterprise, and JBP met several times to discuss 601 Direct's operations, tour the 601 Direct facility, and identify certain 601 Direct inventory and equipment. (Tr. 1 at 23:25-24:2). Bozzi testified that because TCP was not buying 601 Direct, he thought, as he had in past acquisitions of printing companies, that operating the business for a certain period of time would give TCP insight into the staffing and equipment necessary to support 601 Direct's customer base. According to Bozzi, TCP wanted to keep JPB running and continue processing orders in order to earn the work for existing customers (Tr. 1 at 25:3-26:6)

         7. TCP and JBP were unable to come to terms on an operating agreement or asset purchase agreement. (Tr. 1 at 27:23-28:12) Bozzi never purchased any assets of 601 Direct. (Tr. 1 at 78:11-15). However, according to Bozzi, by May 9, 2014, TCP was providing the funding and working capital necessary to keep 601 Direct from shutting down. (Tr. 1 at 26:14-25)

         8. Enterprise was aware that TCP had some involvement in JPB's operations, but assumed TCP was just providing “working capital” until it could purchase some or all of JPB's assets. (Tr. 1 at 143-144)

         9. On May 22, 2014, JPB, Enterprise, and TCP entered into an Agreement Relating to Collateral (“the Collateral Agreement”) (Ex. P-10) to facilitate TCP's purchase of JPB's assets, and specifically its equipment.

         10. The parties agree the Collateral Agreement was unambiguous. By its terms, the proceeds of all JPB inventory, accounts receivable and work in progress identified on a schedule attached to the Collateral Agreement as Exhibit A would be paid to Enterprise and applied to the outstanding loan balance. (Id. at ¶¶ 4, 5).

         11. Paragraph 3 of the Collateral Agreement provided that “[a]ll of the inventory listed on Exhibit A will be segregated and identified separately from all inventory purchased through funds provided by TCP.” (Id. at ¶ 3).

         12. Paragraph 6 of the Collateral Agreement provided that any proceeds from post-closing work funded by TCP and not listed on Exhibit A would be outside the scope of Enterprise's lien, and belong to TCP:

Lender's Release of Lien Regarding Inventory and Work-in Progress Funded by TCP. Lender agrees to not assert its lien, security interest or any claim regarding the Borrower's Inventory and Work-in-Progress that is funded by TCP and is not listed on Exhibit A thereto.

(Id. at ¶ 6).

         13. The Collateral Agreement does not define “Work-in-Progress that is funded by TCP, ” i.e., “TCP-funded work.”

         14. Paragraph 7 of the Collateral Agreement, Equipment Purchase and Release of Lien, provided that TCP would purchase from JPB, for $885, 800.00 (Equipment Purchase Price), such of JPB's equipment as was listed on a schedule attached to the Collateral Agreement as Exhibit B. (Id. at ¶ 7).

         15. Under Paragraph 8 of the Collateral Agreement, Expiration Date, in the event TCP failed to receive a commitment letter from its bank in an amount greater than or equal to the Equipment Purchase Price on or before May 30, 2014, then TCP would be obligated to “immediately vacate [JPB]'s premises and all of TCP's rights under this Agreement with regard to the property listed on Exhibits A and B hereto shall cease and terminate.” (Id. at ¶ 8).

         16. Under Paragraph 16 of the Collateral Agreement, Collateral, the parties agreed that upon the Expiration Date, Enterprise could dispose of all of JPB's collateral (including all accounts receivable). (Id. at ¶ 16(b)).

         17. The Collateral Agreement further provided at Paragraph 17 that TCP's failure to “pay any amounts due hereunder on the date on which such amounts are due” shall ...


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