BRANCH BANKING AND TRUST COMPANY v. RAPPAPORT et al

Filing 22

MEMORANDUM OPINION re 21 Order Granting in Part and Denying in Part Plaintiff's Motion for Summary Judgment. Signed by Judge James E. Boasberg on 10/16/13. (lcjeb1)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

BRANCH BANKING AND TRUST
COMPANY,
Plaintiff,
v.

Civil Action No. 13-510 (JEB)

JAMES E. RAPPAPORT, et al.,
Defendants.

MEMORANDUM OPINION
This case concerns two loans that Plaintiff Branch Banking and Trust Company issued to
six different companies affiliated with Specialty Hospitals of America, LLC. Defendants James
Rappaport and Robert Rummler, respectively the Chairman and CEO of SHA, personally
guaranteed both loans up to certain caps for principal as well as interest and fees. Upon the
various borrowers’ defaults, BB&T brought this suit seeking payment from Defendants on the
guarantees. BB&T now moves for summary judgment, arguing that Defendants’ liability and the
amounts they owe are not in dispute. As Defendants largely conceded at the Motion hearing the
propriety of partial summary judgment as to the principal owed – instead contesting only the
interest and fees – and Plaintiff agreed to such resolution, the Court will grant the Motion in part
and deny it in part.
I.

Background
The Court views the facts, which Defendants “take no issue with,” see Opp. at 3, in the

light most favorable to Defendants. On March 28, 2008, six organizations associated with SHA
(“Borrowers”) took out a $7,500,000 line of credit (“the Revolving Note”) with BB&T, which

1

was later increased to $10,500,000. See Mot., Affidavit of Regina Barry, ¶ 4. The terms of this
loan, including the rate of interest, were modified several times. Id., ¶ 5. Of relevance here,
Borrowers agreed to make monthly payments of accrued interest beginning on May 1, 2008,
through December 31, 2011, at which point all amounts remaining, including the principal,
would become immediately due. Id., ¶ 7. Borrowers additionally agreed to pay late charges of
5% of the overdue amount and “all costs and expenses incurred by BB&T in connection with
collecting or attempting to collect” the sums due under the Note. Id., ¶¶ 8-9. Borrowers,
however, did not pay off the Revolving Note at the date of maturity, December 31, 2011. Id., ¶
10. As of September 9, 2013, Borrowers owed $6,681,643.61 in principal and $537,223.35 in
interest on this Note. See Reply, Supplemental Affidavit of Regina Barry, ¶ 4.
Borrowers also took out a $35,000,000 loan from BB&T (“the Term Note”) with
specified interest and other conditions. See Barry Aff., ¶ 13. On this loan, they agreed to make
monthly payments beginning on May 1, 2008, through April 1, 2015. Id., ¶ 16. The Term Note
also contained an acceleration provision in the event of default, whereby BB&T could accelerate
and declare immediately due and payable all amounts owed under the Term Note. Id., ¶ 21.
Borrowers also failed to make payment under the Term Note, and BB&T exercised its
acceleration rights. Id., ¶¶ 20-21. As of September 9, 2013, Borrowers owed $28,127,952.81 in
principal and $1,609,380.07 in interest on this Note. See Supp. Barry Aff., ¶ 4.
Defendants Rappaport and Rummler guaranteed both Notes. See Barry Aff., ¶ 23.
Rappaport’s guarantee, however, “is limited to $6,000,000.00 plus any and all accrued and
unpaid interest, fees, charges and costs . . . not to exceed $1,000,000.00.” Id., ¶ 25. Rummler’s
guarantee “is limited to $2,000,000.00 plus any and all accrued and unpaid interest, fees, charges
and costs . . . not to exceed $1,000,000.00.” Id., ¶ 26.

2

BB&T entered into a forbearance agreement with Defendants on May 31, 2012, pursuant
to which they were required to pay $2,000,000 to BB&T by July 20, 2012. Id., ¶¶ 27-29. They
did not make this payment. Id., ¶ 30. Fed up, on April 15, 2013, BB&T filed this action against
Defendants, seeking the $10,000,000 they had personally guaranteed. Plaintiff has now moved
for summary judgment. After the parties submitted their briefs, the Court held a hearing on the
Motion on October 11.
II.

Legal Standard
Summary judgment may be granted 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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v.
Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). Summary judgment may be rendered on a “claim or
defense . . . or [a] part of each claim or defense.” Fed. R. Civ. P. 56(a). “A party asserting that a
fact cannot be or is genuinely disputed must support the assertion by citing to particular parts of
materials in the record.” Fed. R. Civ. P. 56(c)(1)(A). “A fact is ‘material’ if a dispute over it
might affect the outcome of a suit under the governing law; factual disputes that are ‘irrelevant or
unnecessary’ do not affect the summary judgment determination.” Holcomb, 433 F.3d at 895
(quoting Liberty Lobby, Inc., 477 U.S. at 248). An issue is “genuine” if the evidence is such that
a reasonable jury could return a verdict for the nonmoving party. See id. The party seeking
summary judgment “bears the heavy burden of establishing that the merits of his case are so
clear that expedited action is justified.” Taxpayers Watchdog, Inc., v. Stanley, 819 F.2d 294,
297 (D.C. Cir. 1987). “Until a movant has met its burden, the opponent of a summary judgment
motion is under no obligation to present any evidence.” Gray v. Greyhound Lines, East, 545
F.2d 169, 174 (D.C. Cir. 1976).

3

When a motion for summary judgment is under consideration, “the evidence of the nonmovant[s] is to be believed, and all justifiable inferences are to be drawn in [their] favor.”
Liberty Lobby, Inc., 477 U.S. at 255; see also Mastro v. Potomac Elec. Power Co., 447 F.3d 843,
850 (D.C. Cir. 2006); Aka v. Washington Hospital Center, 156 F.3d 1284, 1288 (D.C. Cir. 1998)
(en banc); Washington Post Co. v. U.S. Dep’t of Health and Human Services, 865 F.2d 320, 325
(D.C. Cir. 1989). On a motion for summary judgment, the Court must “eschew making
credibility determinations or weighing the evidence.” Czekalski v. Peters, 475 F.3d 360, 363
(D.C. Cir. 2007).
The nonmoving party’s opposition, however, must consist of more than mere
unsupported allegations or denials and must be supported by affidavits, declarations, or other
competent evidence, setting forth specific facts showing that there is a genuine issue for trial.
Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). He is required to
provide evidence that would permit a reasonable jury to find in his favor. Laningham v. United
States Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987). If the nonmovant’s evidence is “merely
colorable” or “not significantly probative,” summary judgment may be granted. Liberty Lobby,
Inc., 477 U.S. at 249-50; see Scott v. Harris, 550 U.S. 372, 380 (2007) (“Where the record taken
as a whole could not lead a rational trier of fact to find for the non-moving party, there is ‘no
genuine issue for trial.’”) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986)).
III.

Analysis
In moving for summary judgment, BB&T argues it is undisputed that Defendants

guaranteed the loans and that they now owe the money. Defendants counter with two arguments:
First, the District of Columbia’s takeover of United Medical Nursing Center may somehow

4

reduce the amount of principal due. Second, BB&T has not properly itemized the interest and
fees due. The Court will address each in turn.
A. UMNC Takeover
While not contesting the validity of the guarantees or the amount of principal owed,
Defendants contend that the takeover of UMNC – an SHA subsidiary – by the District of
Columbia’s Not-for-Profit Hospital Corporation could yield an offset because BB&T may have
recouped some funds from the NFPHC. As discussed earlier, SHA-affiliated corporations owe
over $34 million in principal plus over $2 million in interest and fees. Defendants have
guaranteed up to $8 million in principal and up to $2 million in interest and fees. If, after any
offset, the amount guaranteed is still less than the amount owed, then the UMNC takeover is
irrelevant. To be of notice, therefore, BB&T must have received over $26 million – i.e., the
difference between the full amounts owed and those guaranteed – from the District’s NFPHC.
Yet, Defendants’ counsel admitted at the October 11th hearing that any offset from the UMNC
takeover would not even approach that sum. The takeover thus has no effect on the current
Motion.
To the extent that Defendants’ counsel attempted to proffer additional facts to the Court
at the hearing regarding other potential offsets, a summary judgment hearing is neither the time
nor the place for such factual supplementation, particularly via attorney proffer. See Fed. R. Civ.
P. 56(c) (party must “cit[e] to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations, stipulations . . . ,
admissions, interrogatory answers, or other materials” to support its factual positions) (emphasis
added). As the parties agree that the UMNC takeover does not reduce the amount of principal
Defendants guaranteed, the Court will grant summary judgment as to the principal owed.

5

B. Itemized Interest
At the hearing, despite conceding that partial summary judgment was proper as to the
principal, Defendants reiterated the position in their briefs that judgment should not be entered as
to the interest owed without “an itemized statement or other document detailing the amounts
properly payable under” the guarantees. See Opp. at 3, 7-8. While the Court is aware of some
cases in which judgment has been entered concerning interest based only on the bare assertions
of an affiant as to the amount due, see, e.g., Branch Banking & Trust Co. v. Broaderip, No. 1000289, 2011 WL 3511774 (S.D. Ala. Aug. 11, 2011), the Court need not follow that course. As
Plaintiff’s counsel at the hearing agreed to partial summary judgment on the principal with the
opportunity to file a subsequent motion with more supporting documentation on the interest, this
is the result that should obtain here.
IV.

Conclusion
For the foregoing reasons, the Court will grant in part, and deny in part BB&T’s Motion

for Summary Judgment. A separate Order consistent with this Opinion will be issued this day.

/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: October 16, 2013

6