Angel v. Chiron Equities LLC et al
Filing
41
ORDER granting in part and denying in part 17 Motion for Summary Judgment; denying 23 Motion for Summary Judgment. Signed by Judge James M. Moody on 8/10/12. (kpr)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
BANK OF THE OZARKS
VS.
PLAINTIFF
NO. 4:11CV00334
CHIRON EQUITIES, LLC; KYLE TAUCH
and LOWERY WALTER MCNEIL
DEFENDANTS
ORDER
Pending are motions for summary judgment filed on behalf of Plaintiff, Bank of the
Ozarks (“the Bank”) and Separate Defendant, Lowery Walter McNeil (“McNeil”)(Docket #’s 17
and 23). For the reasons stated herein, the Bank’s motion for summary judgment is granted in
part and denied in part. McNeil’s motion for summary judgment is denied.
Facts
On or about May 28, 2008, the Bank and Separate Defendant Chiron Equities, LLC
(“Chiron”) entered into an Assignment Agreement (“the Assignment Agreement”)1. The
Assignment Agreement assigned certain equipment finance agreements to Chiron. In exchange
for the assignment of the equipment finance agreements, Chiron executed and delivered to the
Bank two (2) Promissory Notes (“Promissory Notes”) payable to the Bank. The obligations of
Chiron under the Assignment Agreement were guaranteed by Separate Defendant Kyle Tauch
(“Tauch”) pursuant to a Guaranty. One of the Promissory Notes has been modified four times,
McNeil was not a party to any of these modifications.
The Bank has executed the assignment pursuant to the Assignment Agreement. Chiron
and Kyle Tauch have defaulted on their obligations under the Assignment Agreement, the two
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Separate Defendant McNeil was not a party to the Assignment Agreement.
(2) Promissory Notes and the Guaranty. Pursuant to the terms of the Assignment Agreement and
the two (2) Promissory Notes, the Bank has declared all unpaid payments to be immediately due
and payable. The Bank states that the amount due and owing from Chiron and Kyle Tauch,
jointly and severally is $434,424.56. Chiron and Tauch deny that this amount is accurate.
Congress Materials LLC (“Congress”)2 executed and delivered three Equipment
Finance Agreements (“Equipment Finance Agreements”) to the Bank. Pursuant to the terms of
the Equipment Finance Agreements, Congress agreed to make certain payments to the Bank.
Each of the three Equipment Finance Agreements contained a Guaranty signed by Tauch. Each
of the three Equipment Finance Agreements were modified twice and these modifications were
signed by Tauch in his individual capacity. The Bank claims to have fully performed its
obligations under the three Equipment Finance Agreements. It is undisputed that the payments
of Congress and Tauch are not current. The Bank has declared all unpaid payments due under
the Equipment Finance Agreements and claims that the amount due and owing from Tauch is
$132,350.02. Tauch denies that this amount is accurate.
On or about June 20, 2007, McNeil, as Chief Executive Officer of Green Aggregates,
Inc., executed an Equipment Finance Agreement (“Equipment Finance Agreement No. 1") in
favor of the Bank. As a separate agreement, McNeil executed a personal Guaranty related to the
obligations of Green Aggregates under Equipment Finance Agreement No. 1.
Equipment
Finance Agreement No. 1 was modified on or about July 13, 2007. On or about October 18,
2007, McNeil, as Chief Executive Officer of Green Aggregates, Inc., executed an Equipment
2
The Bank represents that Congress is not a party to this proceeding due to its pending
Chapter 11 bankruptcy case.
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Finance Agreement (“Equipment Finance Agreement No. 2") in favor of the Bank. As a
separate agreement, McNeil executed a personal Guaranty related to the obligations of Green
Aggregates under Equipment Finance Agreement No. 2. Equipment Finance Agreements 1 and
2 are the finance agreements which were assigned to Chiron pursuant to the Assignment
Agreement discussed herein.
The Bank argues that pursuant to the Assignment Agreement, Chiron gave the Bank a
security interest in Equipment Finance Agreements 1 and 2 including all guaranties and other
supporting obligations. The Assignment Agreement also states that all amounts due with respect
to the Equipment Finance Agreements shall be payable exclusively to the Bank. The Bank
claims to be in possession of Equipment Finance Agreement 1 and 2. The Bank argues that since
Chiron has defaulted on its payment obligations to the Bank it is entitled to all the rights of
Chiron as the owner and holder of the Equipment Finance Agreements. The Bank seeks to
collect payments due under the Equipment Finance Agreements from the original debtors. The
Bank seeks recovery from Chiron, which it claims is formerly Green Aggregates, Inc., and
McNeil. McNeil argues that the Bank’s interest in his personal guaranties was extinguished
upon the Bank’s assignment of the Finance Agreements to Chiron. Further, McNeil denies that
Green Aggregates, Inc. is now known as Chiron. The Bank has made demand on McNeil for
the total amount due of $434,424.56, jointly and severally, to the obligations of Chiron and
Tauch.
In addition to McNeil’s argument that the Bank’s interest in his personal guaranty was
extinguished upon the Bank’s assignment of the Finance Agreements to Chiron, McNeil claims
that he was released from any and all claims arising from the guaranties at issue herein. McNeil
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claims that on or about March 25, 2008, Congress Materials, LLC (“Congress”), an affiliate of
Chiron, entered into a Consulting Agreement with McNeil securing his services as a consultant
from March 2008 through August 2008. In consideration for McNeil’s services as a consultant
to Congress, Chiron agreed that, upon McNeil’s successful completion of the Consulting
Agreement, Chiron would release McNeil from any and all claims and causes of action arising
from or related to the Guaranties relevant to this matter. On or about September 1, 2008, Chiron
executed a Release of Guaranty in favor or McNeil. McNeil argues that this Release effectively
absolved McNeil from any and all Guaranties previously made. The Bank argues that this
Release is void and unenforceable.
Standard for Summary Judgment
Summary judgment is appropriate only when there is no genuine issue of material fact, so
that the dispute may be decided solely on legal grounds. Holloway v. Lockhart, 813 F.2d 874
(8th Cir. 1987); Fed. R. Civ. P. 56. The Supreme Court has established guidelines to assist trial
courts in determining whether this standard has been met:
The inquiry performed is the threshold inquiry of determining
whether there is a need for trial -- whether, in other words, there
are any genuine factual issues that properly can be resolved only
by a finder of fact because they may reasonably be resolved in
favor of either party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
The Eighth Circuit Court of Appeals has cautioned that summary judgment should be
invoked carefully so that no person will be improperly deprived of a trial of disputed factual
issues. Inland Oil & Transport Co. v. United States, 600 F.2d 725 (8th Cir. 1979), cert. denied,
444 U.S. 991 (1979). The Eighth Circuit set out the burden of the parties in connection with a
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summary judgment motion in Counts v. M.K. Ferguson Co., 862 F.2d 1338 (8th Cir. 1988):
[T]he burden on the moving party for summary judgment is only to
demonstrate, i.e., ‘[to] point out to the District Court,’ that the
record does not disclose a genuine dispute on a material fact. It is
enough for the movant to bring up the fact that the record does not
contain such an issue and to identify that part of the record which
bears out his assertion. Once this is done, his burden is
discharged, and, if the record in fact bears out the claim that no
genuine dispute exists on any material fact, it is then the
respondent’s burden to set forth affirmative evidence, specific
facts, showing that there is a genuine dispute on that issue. If the
respondent fails to carry that burden, summary judgment should be
granted.
Id. at 1339 (quoting City of Mt. Pleasant v. Associated Elec. Coop., 838 F.2d 268, 273-274 (8th
Cir. 1988) (citations omitted)(brackets in original)). Only disputes over facts that may affect the
outcome of the suit under governing law will properly preclude the entry of summary judgment.
Anderson, 477 U.S. at 248.
Discussion
It is undisputed that Chiron and Tauch are in default under the Assignment Agreement as
alleged in Count 1 of the Bank’s complaint. Although Defendants generally dispute that the
amount owed under the Agreement, $434,424.56, as averred by Alan Dobbins, the Vice
President of Bank of the Ozarks Leasing Division, they fail to offer any documentation to
support their denial by affidavit or other supporting proof. The Court finds that Defendant’s
have failed to meet “proof with proof” as required by both Fed. R. Civ. P. 56(e) and Ark. R. Civ.
P. 56(e). See, Killian v. Gibson, 2012 Ark. App. 299, ___ S.W.3d, ___,(Ark. App., 2012),
Dillard v. Resolution Trust Co., 308 Ark. 357, 824 S.W.2d 387 (1992). Accordingly, Plaintiff’s
motion for summary judgment is GRANTED on Count I of Plaintiff’s complaint. Judgment will
be entered in favor of Plaintiff in the amount of $434,424.56 of and from Separate Defendants
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Chevron and Tauch, jointly and severally.
It is also undisputed that Tauch is in default under the three Equipment Finance
Agreements as alleged in Count 2 of the Bank’s complaint. Although Tauch generally disputes
that the amount owed under the Agreements, $132,350.02, as averred by Alan Dobbins, the Vice
President of Bank of the Ozarks Leasing Division, he fails to offer any documentation to support
his denial by affidavit or other supporting proof. The Court finds that Tauch has failed to meet
“proof with proof” as required by both Fed. R. Civ. P. 56(e) and Ark. R. Civ. P. 56(e). See,
Killian v. Gibson, 2012 Ark. App. 299, ___ S.W.3d, ___,(Ark. App., 2012), Dillard v.
Resolution Trust Co., 308 Ark. 357, 824 S.W.2d 387 (1992). Accordingly, Plaintiff’s motion for
summary judgment is GRANTED on Count 2 of Plaintiff’s complaint. Judgment will be entered
in favor of Plaintiff in the amount of $132,350.02 of and from Separate Defendant Tauch.
The Court finds that questions of fact preclude the entry of summary judgment in favor of
the Bank as to its claims against McNeil. Likewise, questions of fact preclude the entry of
summary judgment in favor of McNeil. Specifically, the Court finds the following questions of
fact preclude the entry of summary judgment on these claims:
1.
2.
3.
4.
Whether the guaranties at issue are assignable without the guarantor’s
consent;
If the guaranties are assignable, were they extinguished by the assignment
in this case;
Whether the language relied upon by the Bank in the Assignment
Agreement meets the requirements under Arkansas law for the
reservation, attachment and enforcement of a security interest; and
The effect, if any, of the Release of Guaranty.
Wherefore, the Bank’s motion for summary judgment is granted as to its claims against
Chiron and Tauch; the Bank’s motion for summary judgment is denied as to its claims against
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McNeil and McNeil’s motion for summary judgment is denied.
IT IS SO ORDERED this 10th day of August, 2012.
____________________________________
James M. Moody
United States District Judge
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