United States District Court, D. Kansas
MEMORANDUM AND ORDER
SAM A CROW, Senior District Judge.
The plaintiff Cessna Finance Corporation ("CFC") financed the defendant VYWB, LLC's ("VYWB's") purchase of two jets for the total amount of $13, 032, 500.00 ($6, 516, 250 per jet). Promissory notes and security agreements on each jet were executed which gave CFC security interests, and the defendant Parmjit S. Parmar ("Parmar") also executed guaranty agreements that unconditionally guaranteed VYWB's obligations to CFC. VYWB defaulted when it stopped making payments in December 2008 and after. CFC repossessed the jets in late January of 2009. CFC sold the jets in 2010 and brought this action to recover the deficiencies due under the notes and agreements. The defendants answered the complaint raising several defenses to their liability for these deficiencies. In response to the plaintiff's interrogatories, the defendant withdrew all, or nearly all, of their defenses.
The plaintiff now moves for summary judgment arguing that the defendants' withdrawal of defenses silences any factual disputes and entitles the plaintiff to judgment as a matter of law on its breach of contract claims. On the joint motion of the parties, the magistrate judge suspended the final pretrial conference pending this ruling on the plaintiff's summary judgment motion. (Dk. 39). Thus, the court's ruling here is without the benefit of a pretrial order.
Rule 56 authorizes a court to "grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A fact is material if it would affect the outcome of a claim or defense under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "[T]he dispute about a material fact is "genuine, ..., if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The essential inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether the evidence is so one sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, 477 U.S. at 251-52. The summary judgment movant bears the initial burden of pointing out those portions of the record that show it entitled to judgment as a matter of law. Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.1992), cert. denied, 506 U.S. 1013 (1992). If the movant meets that burden, the non-movant must come forward with specific facts based on admissible evidence from which a rational fact finder could find in the non-movant's favor. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998).
CFC's memorandum includes 42 paragraphs of material facts, and the court finds that the defendants have effectively controverted only one of them, the amount of reasonable attorney's fees incurred in this case. In sum, paragraphs 1-39 and 41-42 are uncontroverted. The defendants' do not create a material issue of fact from referencing multiple times their contractual liability for only those attorney's fees that are reasonable. The plaintiff's statement of facts includes the express contract terms that allow only "reasonable attorneys' fees, " and there is no factual or legal dispute between the parties on this general liability. (Dk. 33, p. 8, ¶ 30). As to whether the plaintiff has come forward with sufficient proof of the reasonableness of the attorneys' fees, this is a matter addressed below.
The defendants also have not effectively controverted the plaintiff's statement, "CFC performed the inspections, maintenance and repairs on the Aircraft that CFC believed were reasonable and necessary to prepare the Aircraft for sale." Id. at p. 7, ¶ 20. The defendants have not submitted any arguments or evidence supporting a factual dispute over whether these "reasonable and necessary" inspections, maintenance and repairs are inconsistent with the plaintiff's duty to mitigate. (Dk. 46, p.3). CFC's paragraph 39 also is not controverted by the defendants' citation of their answer to the amended complaint. This paragraph accurately summarizes the plaintiff's interrogatory and the defendants' answers thereto. The defendants' effort to preserve a failure to mitigate defense will be addressed below. Following its precedent on fee issues, the court agrees that the CFC's record is insufficient to sustain ¶ 42.
The court adopts by reference the uncontroverted facts appearing in the plaintiff's memorandum. The following is a summary of those uncontroverted facts for the benefit of providing a context to this order and its rationale.
1. In this action, the plaintiff CFC is the lender and secured party, the defendant VYWB is the debtor, and the defendant Parmar is the guarantor. On February 29, 2008, CFC provided financing for VYWB's purchase of two Hawker Jets, and VYWB executed two promissory notes promising to repay $6, 516, 250.00 plus interest on each. VYWB also executed addendums setting out the repayment terms and security agreements granting CFC a security interest in the jets. Parmar unconditionally guaranteed VYWB's obligations under the notes and security agreements by executing a separate guaranty for each jet. In pertinent part, the guaranties provided:
[Parmar] understands and agrees that [his] liability under this Guaranty is unlimited [and]... nothing but full payment in cash to [CFC] of [VYWB's] Indebtedness, and the full and timely performance of all of [VYWB]'s other obligations under the [Notes and Security Agreements], shall reduce or release [Parmar] from [his] obligations and liabilities under this Guaranty.
(Dk. 33, p. 5, ¶ 11).
2. By failing to make the payments due on December 1, 2008, and all subsequent payments when due under the notes, VYWB defaulted on the notes and security agreements. When the defaults were not cured after the proper notices, CFC repossessed the jets on January 21, 2009, and January 30, 2009.
3. As of repossession, the debt securing the first jet, N525LR, was $6, 273, 962.27, and the debt on the second jet, N501LR was $6, 282, 584.81. CFC sent defendants the notice of repossession, outstanding deficiencies, right to redeem, right to an accounting, and intended disposition by private sale after February 20, 2009. The defendants are not asserting that CFC failed to comply with the UCC in its repossession of the aircraft.
4. In its judgment of what was reasonable and necessary to prepare the jets for sale, CFC performed inspections, maintenance and repairs on the jets. It advertised the sale of the jets, and hired an aircraft sales broker. On March 23, 2010, CFC sold the N525LR jet for $3, 200, 000.00. The defendants are not asserting that this was a commercially unreasonable sale. On July 1, 2010, CFC sold the N501LR jet for $2, 725, 000.00, and defendants also do not challenge this sale as commercially unreasonable. By letters dated July 2 and 3, 2010, CFC notified defendants of the disposition of the aircraft and of the outstanding deficiencies. The defendants do not assert that CFC failed to comply with any UCC provisions in its disposition of the jets.
5. The notes and security agreements obligate VYWB to reimburse CFC for any expenses, including reasonable attorneys' fees, incurred to collect a deficiency or to enforce CFC's rights under the notes, security agreements, and guaranties. The guaranties also provide that Parmar will reimburse CFC for ...