Pnc Bank v. Berg
Superior Court of Delaware, New Castle
December 11, 1996, Submitted ; January 31, 1997, Decided
C.A. No. 94C-09-208-WTQ
Letter Opinion and Order on Motions for Summary Judgment
1. Plaintiff PNC Bank's Motion for Partial Summary Judgment
2. Defendant Berg's Motion for Summary Judgment
3. Defendants Tighe, Cottrell, Logan and Tighe, Cottrell & Logan, P.A.'s Motion for Summary Judgment
This is the Court's decision on plaintiff PNC Bank, Delaware's Motion for Partial [*2] Summary Judgment, defendant Howard M. Berg's Motion for Summary Judgment, and defendants Michael K. Tighe, Paul Cottrell, Donald L. Logan and Tighe, Cottrell & Logan, P.A.'s Motion for Summary Judgment For the reasons herein stated, plaintiff PNC Bank's Motion is GRANTED in part and DENIED in part, defendant Berg's Motion is DENIED, and defendants Michael K. Tighe, Paul Cottrell, Donald L. Logan and Tighe, Cottrell & Logan, P.A.'s (collectively "the Tighe defendants") Motion is DENIED.
Howard M. Berg ("Berg") was a fixture on Delaware's legal landscape from his admission to the Bar in the 1950s until his retirement in the 1990s. His law firm has undergone many personnel changes over the years, but the one constant was the presence of Berg as the sole or majority partner. At the beginning of the time period relevant to this inquiry, around 1992, Berg's firm was Berg, Tighe & Cottrell, P.A. ("the Berg firm"). Berg owned 80% of the shares of the firm.
In early 1992, the Berg firm undertook a relocation and upgrade of its office space. To finance the project, Berg approached PNC Bank for a loan. Berg spoke with Steven Clark, a loan officer at PNC Bank whom he had known [*3] for some time. After reviewing Berg's personal financial statements, Clark set up two loans. The first was a $ 25,000 amortizing term loan for the Berg firm's new telephone system. The second was a $ 75,000 line of credit which would be drawn upon and repaid several times in the normal course of business. It is this second loan which is at the center of this litigation.
Clark sent a commitment letter on the loans to Kevin Downs, the Berg firm's controller, that is, internal accountant, with a copy to Berg. Absent demand or default, the interest on the loan was to be paid [*4] monthly, and the principal had to be reduced to a zero balance once each fiscal year. The commitment letter contained no personal guarantees, nor did it take a security interest in furniture and equipment. Pursuant to the commitment letter, the Berg firm executed and delivered to PNC Bank a note in the amount of $ 75,000. The Berg firm also executed and delivered a financing statement covering "all existing and future accounts, accounts receivable, contract rights, chattel paper, notes, instruments, documents, [and] contracts" owned by the Berg firm. PNC Bank delivered to the Berg firm a security agreement to be executed on behalf of the Berg firm. The security agreement was returned to PNC Bank bearing only the signature of the Berg firm's secretary, defendant Paul Cottrell. PNC Bank sent the "partially executed" security agreement back to the Berg firm for full execution, but this was apparently never accomplished. The Berg firm subsequently made draws against the line of credit and payments against the draws, but by mid-1992 the entire $ 75,000 line of credit was outstanding.Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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1997 Del. Super. LEXIS 19 *; 45 U.C.C. Rep. Serv. 2d (Callaghan) 27
PNC Bank, Delaware v. Howard M. Berg, Michael K. Tighe, Paul Cottrell, Donald L. Logan, Berg, Tighe & Cottrell, P.A., and Tighe, Cottrell & Logan, P.A.
Subsequent History: [*1] Released for Publication by the Court August 29, 1977.
Disposition: Plaintiff PNC Bank's Motion for Partial Summary Judgment GRANTED in part, DENIED in part. Defendant Berg's Motion for Summary Judgment DENIED. Defendants Tighe, Cottrell, Logan and Tighe, Cottrell & Logan, P.A.'s Motion for Summary Judgment DENIED.
security interest, accounts receivable, contractual right, files, hourly, billing, security agreement, contingency fee, collateral, summary judgment, default, funds, summary judgment motion, contingency fee contract, contracts, parties, indemnification, defendants', proceeds, perfected security interest, letter agreement, collection, diversion, Motions, alleges, cases, genuine issue of material fact, necessary consequence, right to payment, withholding tax
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