658 F. App'x 675
4th Cir.2016Background
- PP&G (energy company) maintained a BlackRock account as collateral to ISO‑NE under a Control Agreement; ISO‑NE could have funds released to PP&G only by joint request of ISO‑NE and PP&G.
- PP&G factored receivables to Forest under a Master Factoring Agreement (Forest obtained a broad security interest and funded up to 75% of required collateral in the BlackRock account).
- PP&G’s CEO sent BlackRock a written notification claiming Forest had an assignment and instructing BlackRock to remit future payments to Forest; Forest never revoked that instruction.
- Later, PP&G (through its CEO) requested payments be made to PP&G; BlackRock complied and wired over $1,000,000 to PP&G.
- Forest sued BlackRock alleging conversion and violations of UCC §§ 9‑406 and 9‑607; the district court dismissed for failure to state a claim and Forest appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UCC § 9‑406 (notice to account debtor) creates a private right of action for assignee | Forest: § 9‑406 permits recovery when account debtor pays assignor after notice | BlackRock: § 9‑406 does not create a private remedy for assignees; it governs account‑debtor defenses | Court: No implied private right of action under Maryland law; statute protects account debtors, not assignees |
| Whether UCC § 9‑607 (secured party enforcement) creates a private right of action against account debtor | Forest: § 9‑607 supports claim against BlackRock for honoring PP&G’s request | BlackRock: § 9‑607 grants rights against debtor, not a freestanding cause against account debtors | Court: No private right of action under § 9‑607 for Forest |
| Whether BlackRock’s payment to PP&G constituted conversion of Forest’s property | Forest: Payment to PP&G converted funds Forest had rights to | BlackRock: Any interest was intangible (payment intangible) and not subject to conversion; no dominion over tangible document | Court: Conversion claim fails because Forest’s asserted interest was an intangible/payment intangible not merged into a tangible document (conversion requires tangible or merged document) |
| Whether plaintiff should be allowed to amend complaint or assert breach‑of‑contract on appeal | Forest: Could assert breach of contract as an alternative remedy | BlackRock: Claim not pled below and not raised properly on appeal | Court: Declined to consider belated breach‑of‑contract theory; denial of leave to amend need not be decided because outcome unaffected |
Key Cases Cited
- Fangman v. Genuine Title, LLC, 136 A.3d 772 (Md. 2016) (framework for implying private rights of action under Maryland law)
- Baker v. Montgomery County, 50 A.3d 1112 (Md. 2012) (factors for determining implied private remedies)
- Jasen v. Allied Inv. Corp., 731 A.2d 957 (Md. 1999) (Maryland requires intangible rights be merged into a tangible document for conversion)
- Thompson v. UBS Fin. Servs., Inc., 115 A.3d 125 (Md. 2015) (examples and limits of conversion for intangible property)
- Darcars Motors of Silver Spring, Inc. v. Borzym, 841 A.2d 828 (Md. 2004) (conversion requires act of ownership/dominion and intent)