Scott USA Inc. v. Patregnani

Filing 45

MEMORANDUM DECISION AND ORDER denying 30 Defendant's Motion for a Temporary Stay; granting 24 Plaintiff's Motion for Summary Judgment; denying 22 Defendant's Motion to Amend Answer; denying 29 Defendant's Motion to Defer Judgment. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
SCOTT USA INC,
Case No. 1:14-cv-00482-BLW
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.
ARMAND PATREGNANI,
Defendant/Third-Party Plaintiff,
v.
BIKESTREET RETAIL LLC d/b/a
BIKESTREET USA,
Third-Party Defendant.

INTRODUCTION
Before the Court is Defendant Patregnani’s Motion to Amend Answer (Dkt. 22),
Plaintiff SCOTT USA’s Motion for Summary Judgment (Dkt. 24), Defendant
Patregnani’s 56(d) Motion to Defer Judgment (Dkt. 29), and Defendant Patregnani’s
Motion for a Temporary Stay (Dkt. 30). The motions were argued on June 17, 2015. The
Court ruled from the bench denying Defendant’s Motion for a Temporary Stay, denying
Defendant’s Motion to Amend as futile, and denying Defendant’s Motion to Defer

MEMORANDUM DECISION AND ORDER - 1

Judgment (Rule 56(d)). The Court granted Plaintiff’s Motion for Summary Judgment.
This decision memorializes the Court’s oral ruling.
BACKGROUND
In the case before the Court, Plaintiff, SCOTT USA Inc., desires to enforce a
personal guarantee entered into by Defendant Armand Patregnani guaranteeing the debt
obligations incurred by Third-Party Defendant BikeStreet Retail LLC.
In June 2012 and again in August 2012, Patregnani, as the manager and director of
Bike Street, executed a written personal guarantee in favor of SCOTT USA. Pursuant to
the terms of the guarantee, Patregnani guaranteed BikeStreet’s debt obligations to
SCOTT USA. In return, SCOTT USA sold bicycles and bike parts to BikeStreet on credit
terms.
In October 2014, BikeStreet went into default. On October 8, 2014, SCOTT USA
filed their Complaint against Patregnani, seeking to enforce the personal guarantee and
collect the principal amount outstanding of $598,886.44. On November 10, 2014, this
matter was removed to federal court. (Dkt.1). Patregnani filed his Answer and Third
Party Complaint seeking indemnity from BikeStreet on November 21, 2014. (Dkt. 8).
Patregnani filed a Motion for Leave to File an Amended Answer on February 27, 2015.
(Dkt. 22). SCOTT USA filed a Motion for Summary Judgement on March 23, 2015.
(Dkt. 24). In response, Patregnani filed a Motion for Relief under F.R.C.P. 56(d) on April
16, 2015 asking the Court to defer Judgment on the Summary Judgment Motion. (Dkt.

MEMORANDUM DECISION AND ORDER - 2

29). On the same day, Patregnani also filed a Motion for Temporary Stay (Dkt. 30) in
light of pending litigation in Florida.
Because the Motion for Temporary Stay affects the ability to move forward,
including rendering decisions in the other Motions before the Court, it will be addressed
first.
ANALYSIS
1.

Motion for a Temporary Stay
Patregnani contends that because BikeStreet filed a petition commencing an

Assignment for the Benefit of Creditors (ABC) proceeding under Florida law, this action
should be stayed. Patregnani’s argument is not well-founded because granting a stay
would be inconsistent with SCOTT USA’s rights and Patregnani’s obligations under the
personal guarantee.
Patregnani expressly waived any right to require SCOTT USA to pursue a claim
against BikeStreet before proceeding against him individually:
The undersigned hereby expressly waives any right to . . . require that SCOTT
USA . . . proceed against the aforementioned principal debtor (the Dealer) . . . as a
condition precedent to the undersigned’s immediate and continuing duty and
liability to make full and prompt payment of all sums covered by this guarantee.
(Dkt. 25, Ex. H)
SCOTT USA has the express right to go directly to Patregnani in an effort to enforce the
guarantee without seeking any other relief.
Courts in Idaho and a variety of federal courts have enforced such language
according to its plain terms, and denied efforts by a guarantor to compel an action against

MEMORANDUM DECISION AND ORDER - 3

the underlying debtor before any effort is undertaken to enforce the unconditional
guarantee. See, e.g., Valley Bank v. Larson, 104 Idaho 772, 775-76, 663 P.2d 653 (1983);
Webster Capital Fin. v. Newby, Case No. 12-2290-EFM, slip op. at *5 (D. Kan. Feb. 14,
2013); Bank of Am. v. Sullivan, Case No. 8:13-CV-385-T-17-EAJ, slip op. (M.D. Fla.
May 23, 2013) (denying motion to stay proceedings against individuals who signed
unconditional commercial loan guarantees); Bank of Am., N.A. v. WRT Realty, L.P.,769 F.
Supp. 2d 36, 41 (D. Mass. 2011); Mitsui Taiyo Kobe Bk. v. First Nat’l, 788 F. Supp.
1007, 1009 (N.D. Ill. 1992)(denying motion to stay action against guarantor pending
resolution of foreclosure suit against primary obligor).
The Court will not ignore the express language of the contract granting an
unconditional guarantee. To do so would be plainly inconsistent with the guarantee’s
very essence and purpose. Accordingly, there is no reason for this Court to await the
outcome of the Florida ABC action,1 and the Court will deny the Motion for Temporary
Stay.

1

Additionally, it is unknown how long the Florida proceeding could take. John E. Page, Counsel for
Patregnani in the Florida ABC litigation, testified that the “Administration of an [Assignment for the
Benefit of Creditors] Proceeding takes at least six months and may last more than a year…”
Declaration of John E. Page ¶ 7 (Dkt. 30-2) (emphasis added). Undue delay is a further reason to deny
Defendant’s Motion.

MEMORANDUM DECISION AND ORDER - 4

2.

Motion for Summary Judgment
Because Patregnani’s Motion for a Temporary Stay is denied, the Court will

address SCOTT USA’s Motion for Summary Judgment. For the reasons set forth below,
the Court will grant the Motion.
A.

Legal Standard

Summary judgment is appropriate where a party can show that, as to any claim or
defense, “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). One of the principal purposes of the
summary judgment “is to isolate and dispose of factually unsupported claims . . . .”
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is “not a disfavored procedural
shortcut,” but is instead the “principal tool[ ] by which factually insufficient claims or
defenses [can] be isolated and prevented from going to trial with the attendant
unwarranted consumption of public and private resources.” Id. at 327. “[T]he mere
existence of some alleged factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986). There must be a genuine dispute as to any material fact – a fact
“that may affect the outcome of the case.” Id. at 248.
The evidence must be viewed in the light most favorable to the non-moving party,
and the Court must not make credibility findings. Id. at 255. Direct testimony of the
non-movant must be believed, however implausible. Leslie v. Grupo ICA, 198 F.3d
1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt

MEMORANDUM DECISION AND ORDER - 5

unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d
1205, 1208 (9th Cir. 1988).
The moving party bears the initial burden of demonstrating the absence of a
genuine dispute as to material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir.
2001)(en banc). To carry this burden, the moving party need not introduce any
affirmative evidence (such as affidavits or deposition excerpts) but may simply point out
the absence of evidence to support the nonmoving party’s case. Fairbank v. Wunderman
Cato Johnson, 212 F.3d 528, 532 (9th Cir.2000).
This shifts the burden to the non-moving party to produce evidence sufficient to
support a jury verdict in her favor. Deveraux, 263 F.3d at 1076. The non-moving party
must go beyond the pleadings and show “by her [ ] affidavits, or by the depositions,
answers to interrogatories, or admissions on file” that a genuine dispute of material fact
exists. Celotex, 477 U.S. at 324.
However, the Court is “not required to comb through the record to find some
reason to deny a motion for summary judgment.” Carmen v. San Francisco Unified Sch.
Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quotation omitted). Instead, the “party
opposing summary judgment must direct [the Court’s] attention to specific triable facts.”
Southern California Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003).
Only admissible evidence may be considered in ruling on a motion for summary
judgment. Orr v. Bank of America, 285 F.3d 764, 773 (9th Cir. 2002); see also
Fed.R.Civ.P. 56(e). And statements in a brief, unsupported by the record, cannot be used

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to create a factual dispute. Barnes v. Independent Auto. Dealers, 64 F.3d 1389, 1396 n.3
(9th Cir. 1995).
B.

Discussion

As the moving party, SCOTT USA bears the initial burden showing that there are
no genuine issues of material fact in this case. As stated above, this does not need to be
proved by any affirmative facts, but by simply pointing out the lack of evidence on the
other party’s side. SCOTT USA contends that this is a plain and simple breach of
contract claim and that Patregnani has no evidence to indicate why it is otherwise, or why
he does not need to perform. A breach of contract is “a failure, without legal excuse, to
perform any promise, which forms the whole or part of the contract.” Idaho Power Co. v.
Cogeneration, Inc., 9 P.3d 1204, 1212 (2000).
The burden is then shifted to the non-moving party to provide evidence which
would create a dispute as to a material fact. In this case, Patregnani would need to present
a “legal excuse” for his non-performance of the personal guarantee.
Patregnani first asserts that he has created sufficient material questions of fact
regarding whether Scott materially breached the contract by exceeding the allowable
amount of credit. Patregnani however does not present any evidence to support this
claim, other than Patregnani’s own unsubstantiated statement. Indeed, the evidence
SCOTT USA has submitted demonstrates that SCOTT USA never exceeded the
$800,000 credit limit. That evidence has not been rebutted by anything more than
Patregnani’s conclusory and unsupported claims; significantly, he has pointed to no

MEMORANDUM DECISION AND ORDER - 7

financial records, accountings, or internal memoranda showing, or even suggesting, the
credit limit was exceeded.
Next, Patregnani claims that a notice may have been sent from BikeStreet CEO
Gregg Throgmartin relieving Patregnani of his obligation, but again, the only evidence in
support of this claim is his own unsubstantiated testimony. More importantly, the plain
language of the contract makes clear that until such notice is actually received, the
personal guarantee remains in force:
This guarantee shall continue in full force and effect, and shall be conclusively
presumed to be relied upon by SCOTT USA, until such time as SCOTT USA
receives from the undersigned written notice of revocation. Such revocation shall
not in any way relieve the undersigned from any liability for any indebtedness
incurred prior to the actual receipt by SCOTT USA at its office at P.O. Box 2030,
Sun Valley, Idaho 83353 of such notice by United States first class mail, postage
prepaid, return receipt requested. (Dkt. 25, Ex. H.)
Yet, Patregnani offers no evidence that he complied with the contract terms by
sending a written revocation. Patregnani has not produced a copy of a notice of
revocation; nor has Patregnani presented any evidence of its transmittal to or receipt by
SCOTT USA. And SCOTTSUSA denies receiving any such notice. In considering the
pending motion for summary judgment, the Court cannot consider Patregnani’s belief that
notice may have been sent to SCOTT USA.
Finally, Patregnani asserts that some merchandise may not properly be accounted
for or that at times the revolving line of credit was not accurately reported. These are
questions of math and documentation, not questions of opinion. Again, Patregnani has
presented no evidence to validate these claims. They seem to be nothing more than

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unresolved questions lurking in Patregnani’s mind. That is not enough to create a
disputed issue of material fact.
Normally, it is the Court’s duty to construe all inferences in favor of the nonmoving party, however as previously noted, the Court is “not required to comb through
the record to find some reason to deny a motion for summary judgment.” Carmen v. San
Francisco Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quotation omitted).
Instead, the “party opposing summary judgment must direct [the Court’s] attention to
specific triable facts.” Southern California Gas Co. v. City of Santa Ana, 336 F.3d 885,
889 (9th Cir. 2003). Patregnani has not pointed to any facts, or produced any evidence to
support his claims. Defendant repeatedly makes broad assertions, such as “Patregnani has
shown the existence of material questions of fact” but then asks for more discovery time
(Dkt. 29 pg. 3). Similarly, he argues that “Patregnani’s evidence…creates material
questions of fact…” but then fails to identify the evidence presented or the questions of
fact created (Dkt. 31, pg. 5).
This is precisely why the Ninth Circuit has advised the trial courts that “[a]n
opposing party's mere hope that further evidence may develop prior to trial is an
insufficient basis upon which to justify denial of the motion.” Neely v. St. Paul Fire &
Marine Ins. Co., 584 F.2d 341, 344 (9th Cir. 1978). Without evidence, an opposition to a
summary judgment motion cannot be upheld. See also, Soremekun v. Thrifty Payless,
Inc., 509 F.3d 978, 984 (9th Cir. 2007) (“Conclusory, speculative testimony in affidavits
and moving papers is insufficient to raise genuine issues of fact and defeat summary

MEMORANDUM DECISION AND ORDER - 9

judgment”); Nelson v. Pima Cmty. Coll., 83 F.3d 1075, 1081-82 (9th Cir. 1996) (“mere
allegation and speculation do not create a factual dispute for purposes of summary
judgment”); Witherow v. Paff, 52 F.3d 264, 266 (9th Cir. 1995) (“speculation does not
create a factual dispute”).
Presumably, in light of this, Patregnani filed a Rule 56(d) Motion in response to
SCOTT USA’s Summary Judgment Motion requesting that the Court withhold a decision
so that he could gather the necessary evidence to defeat the Motion. Patregnani noted that
he needed to take the deposition of Karen Bulls, SCOTT USA’s credit manager, (Dkt.
29-1, pg. 3), along with others in order to determine if the contract was breached by
SCOTT USA in regards to the $800,000 credit limit, if merchandise was ever returned,
and if notice had been received of Patregnani’s revocation of his guarantee.
Karen Bulls’ deposition has now been taken (Dkt. 36-2, Ex. A), and it further
underscores and bolsters the documentary evidence SCOTTUSA has submitted showing
that (1) BikeStreet was never allowed to exceed its credit limit, (2) BikeStreet never
returned merchandise, and (3) SCOTT USA never received formal or informal notice that
Patregnani intended to revoke his personal guarantee. Contrary to creating evidence of a
disputed material fact, Ms. Bull’s testimony only serves as further evidence of
Patregnani’s breach.
At oral argument, Patregnani was unable to provide evidence substantiating any of
his previous assertions or show that additional evidence may exist which would present
an issue of material fact. The Court therefore finds that there is no genuine dispute of

MEMORANDUM DECISION AND ORDER - 10

material fact concerning SCOTT USA’s right to enforce Patregnani’s personal guarantee.
Accordingly, SCOTT USA’s Motion for Summary Judgment is granted.
3.

Motion to Amend Answer
As Patregnani has been unable to produce any evidence to support the claim that

his personal guarantee is unenforceable because the credit terms were changed without
his consent, any amendments to his answer at this late date would be futile.
4.

Motion to Defer Judgment 56(d)
As noted in the Summary Judgment discussion, Patregnani’s goal in filing this

motion was presumably to find evidence which would give rise to a dispute over a
material issue of fact in the case. As was discussed above, this was not the outcome. And
now the discovery deadline has passed and Patregnani has not filed a motion to
supplement the record or to extend the discovery deadline. Therefore, the Court will deny
this motion as well.

ORDER
IT IS ORDERED:
1.

Defendant’s Motion for a Temporary Stay (Dkt. 30) is DENIED.

2.

Plaintiff’s Motion for Summary Judgment (Dkt. 24) is GRANTED.,

3.

Defendant’s Motion to Amend Answer (Dkt. 22) is DENIED.

4.

Defendant’s Motion to Defer Judgment under F.R.C.P. 56(d) (Dkt. 29) is
DENIED.

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DAT
TED: Augu 13, 2015
ust
5

__________
__________
_____
___
B. L
Lynn Winm
mill
Chief Judge
ited
District Cou
urt
Uni States D

MEMORA
ANDUM DECI
ISION AND ORDER - 12