1st Source Bank v. Montgomery Equipment Company Inc et al

Filing 48

OPINION AND ORDER GRANTING 42 Motion for Summary Judgment; GRANTING 47 Motion to Dismiss and the claims against Paradise are hereby DISMISSED without prejudice. The Court ORDERS SFG to submit proposed forms of judgment, consistent with this Courts findings, by January 30, 2018. Signed by Judge Rudy Lozano on 1/16/18. (mlc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION

SFG COMMERCIAL AIRCRAFT
LEASING, INC.,

)
)
)
Plaintiff,
)
)
vs.
)
)
MONTGOMERY EQUIPMENT COMPANY, )
INC., et al.,
)
)
Defendants.
)

CAUSE NO. 3:15-CV-324

OPINION AND ORDER
This matter is before the Court on the “Plaintiff’s Motion
for Summary Judgment,” filed by the plaintiff, SFG Commercial
Aircraft Leasing, Inc., on December 30, 2016 (DE #42) and the
“Plaintiff’s Motion to Dismiss Defendant Paradise Airways Corp.,”
filed by the plaintiff, SFG Commercial Aircraft Leasing, Inc., on
March 21, 2017 (DE #47).

For the reasons set forth below, the

motion for summary judgment (DE #42) is GRANTED.

The Court ORDERS

SFG Commercial Aircraft Leasing, Inc. to submit proposed forms of
judgment, consistent with this Court’s findings, by January 30,
2018.

In addition, the motion to dismiss (DE #47) is GRANTED, and

the claims against Paradise Airways Corp. are hereby DISMISSED
without prejudice.

BACKGROUND
The original plaintiff, 1st Source Bank (“1st Source”), filed
a

complaint

based

on

diversity

jurisdiction

against

the

defendants, Montgomery Equipment Company, Inc. (“Montgomery”), Dr.
A.

Thomas

Falbo

(“Dr.

Falbo”),

Paradise

Airways

Corp.

(“Paradise”), and Spectra Jet, Inc. (“Spectra Jet”), on July 27,
2015.

(DE #1.)

The complaint, which describes a financing

arrangement provided by 1st Source to Montgomery, alleges that
Montgomery defaulted on the loan and that Dr. Falbo, who personally
guaranteed Montgomery’s loan obligations, has failed to pay as
required by his guarantee.

(Id. at 2-3.)

On August 20, 2015,

Spectra Jet was dismissed from the lawsuit without prejudice.

(DE

#8.)

Montgomery and Dr. Falbo filed answers on September 29,

2015.

(DE #13 & DE #14.)

1st Source requested an entry of default

against Paradise on October 1, 2015, and the Clerk entered the
default on October 6, 2015.

(DE #15 & DE #16.)

On December 9,

2015, 1st Source filed a motion to substitute SFG Commercial
Aircraft Leasing, Inc. (“SFG”) as the party plaintiff in this case
because it is the successor in interest to 1st Source.

(DE #23.)

The motion was granted, 1st Source was terminated, and SFG was

2

added as the proper plaintiff.
closed on August 29, 2016.

(DE #26.)

(See DE #34.)

Discovery in this case
SFG filed the instant

motion for summary judgment on December 30, 2016.

(DE #42.)

Montgomery and Dr. Falbo filed a joint response on January 27,
2017.

(DE #45.)

SFG filed its reply on February 8, 2017.

#46.)

SFG filed the instant motion to dismiss Paradise from the

action on March 21, 2017.

(DE #47.)

(DE

Neither Montgomery nor Dr.

Falbo have filed a response to the motion to dismiss.

Thus, both

motions are now ripe for adjudication.

DISCUSSION
Motion for Summary Judgment
Standard
Summary judgment must be granted when “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 genuine

dispute of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
every

dispute

between

the

parties

makes

summary

Not

judgment

inappropriate; “[o]nly disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude

3

the entry of summary judgment.”

Id.

In determining whether

summary judgment is appropriate, the deciding court must construe
all facts in the light most favorable to the non-moving party and
draw all reasonable inferences in that party’s favor.
Atterholt, 606 F.3d 355, 358 (7th Cir. 2010).

Ogden v.

“However, our favor

toward the nonmoving party does not extend to drawing inferences
that are supported by only speculation or conjecture.”

Fitzgerald

v. Santoro, 707 F.3d 725, 730 (7th Cir. 2013) (citing Harper v.
C.R. Eng., Inc., 687 F.3d 297, 306 (7th Cir. 2012)).

A party

opposing a properly supported summary judgment motion may not rely
on allegations or denials in her own pleading, but rather must
“marshal and present the court with the evidence she contends will
prove her case.”

Goodman v. Nat’l Sec. Agency, Inc., 621 F.3d

651, 654 (7th Cir. 2010).

If the non-moving party fails to

establish the existence of an essential element on which he or she
bears the burden of proof at trial, summary judgment is proper.
Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006).
Non-compliance with local summary judgment rules may warrant
a penalty -- the court is within its discretion to ignore facts a
litigant has proposed that are not submitted in compliance with
those rules.

See Cichon v. Exelon Generation Co., L.L.C., 401

F.3d 803, 809–10 (7th Cir. 2005).

4

In this district, Local Rule

56-1 mandates that the moving party must include a “Statement of
Material Facts” in its supporting brief and that a party opposing
a summary judgment motion must file a response brief (or appendix)
that includes “a section labeled ‘Statement of Genuine Disputes’
that identifies the material facts that the party contends are
genuinely disputed so as to make a trial necessary.”
L.R. 56-1(a),(b).

N.D. Ind.

The Seventh Circuit has also made it clear

that:
[a] district court is not required to wade
through improper denials and legal argument in
search of a genuinely disputed fact. And a
mere disagreement with the movant’s asserted
facts is inadequate if made without reference
to specific supporting material.
In short,
judges are not like pigs, hunting for truffles
buried in briefs.
Smith

v.

Lamz,

321

F.3d

680,

683

(7th

Cir.

2003)

quotation marks, brackets, and citations omitted).

(internal

Thus, when a

non-movant fails to controvert a moving party’s Statement of
Material Facts with a properly supported Statement of Genuine
Disputes, the movant’s facts may be deemed admitted.

Id. (“We

have consistently held that a failure to respond by the nonmovant
as mandated by the local rules results in an admission.”).

5

Material Facts
Because Montgomery and Dr. Falbo’s response is devoid of a
“Statement of Genuine Disputes” or citations to any relevant
evidence that would dispute SFG’s “Statement of Material Facts,”
the

well-supported

facts

presented

by

undisputed and will be accepted as true.1

SFG

are

considered

Smith, 321 F.3d at 683.

The material facts are as follows:2
On August 27, 2012, 1st Source and Montgomery entered into a
Loan and Security Agreement (the “Loan Agreement”) in which 1st
Source agreed to lend Montgomery $1,125,000.00 pursuant to a
contemporaneously signed and executed document entitled PROMISSORY
NOTE – Term (the “Note”).
“secured

by,

and

subject

(DE #1-1 & DE #1-2.)
in

all

respects

to,

The Note is
the

terms

and

conditions contained in the [Loan] Agreement, all of which are
incorporated by reference into [the] Note.”

(DE #1-1, p. 1.)

The

Note references a “specific Collateral Schedule,” attached to it

1 In addition to the original financial documents attached to the complaint,
SFG has submitted the following: two affidavits of Richard Rozenboom, Vice
President of SFG and Vice President and Senior Work-Out Officer of 1st Source,
along with related emails and financial spreadsheets (DE #43-1 & DE #46-1);
Montgomery and Dr. Falbo’s Response to 1st Source’s Request for Admissions (DE
#43-2); and an affidavit, Curriculum Vitae, and expert opinion report of
Delvin (Del) Fogg, President of Aviation Management Resources LLC, who was
retained by SFG to perform expert services in this case (DE #43-3).

2 Having verified that the cited evidence supports each of the facts
presented by SFG, the Court has borrowed liberally from SFG’s brief (DE #43)
throughout this section.

6

as SCHEDULE “A” (“Schedule A”), which describes the collateral
Montgomery pledged to 1st Source as a 1998 Learjet 31A with Serial
No. 154 and FAA Registration No. N154RT (the “Aircraft”).
at 1-3.)
require

(Id.

Both Section A of the Note and the Loan Agreement itself
Montgomery

to

operating condition.
Agreement

also

keep

the

Aircraft

in

good

repair

(Id. at 3; DE #1-2, p. 2.)

requires

Montgomery

to

not

permit

and

The Loan
“any

lien,

encumbrance, claim, security interest, mechanic’s lien, levy,
attachment or other interest of any individual or entity” attach
to the Aircraft.

(DE #1-2, p. 2.)

Montgomery agreed that it is

responsible for paying “any fees, costs, expenses, penalties, or
interest incurred by [1st Source]” in connection with the Loan
Agreement, including, but not limited to, costs incurred for
inspections, appraisals, or monitoring of the Aircraft and costs
associated with exercising its rights and protecting its interest
in the Aircraft.

(Id.)

Specifically, the Loan Agreement states

that Montgomery must reimburse 1st Source any money it expends for
“taking

possession

of,

holding,

preparing

for

sale

or

other

disposition and selling or otherwise disposing of the [Aircraft]”
and for related attorney fees and costs.

(Id.)3

3 In relevant part, paragraph 5(b) of the Loan Agreement states, “Customer
shall also pay to Bank, or if requested by Bank, directly to the applicable
vendor or other third party, any fees, costs, expenses, penalties or interest
incurred by the Bank in connection with this Agreement, any Note or any of

7

Pursuant to the Loan Agreement, Montgomery is considered to
be in default if, among other events, it fails to make payments as
due or fails to perform any obligation under the Loan Agreement,
Note, or Schedule A.

(Id. at 2-3.)

In the event of a default,

1st Source has the option of “declar[ing] all or any part of the
remaining unpaid indebtedness . . . to be immediately due and
payable . . . .”

(Id. at 3.)

In addition, the Loan Agreement

allows 1st Source to exercise all rights and remedies provided in
the Loan Agreement, the Uniform Commercial Code (“UCC”), or any
other applicable law, which may include taking possession of the
Aircraft

or

Montgomery
continued

performing

failed
for

to

thirty

any

of

Montgomery’s

obligations

perform.

(Id.)

After

days,

for

long

and

as

a
as

default
the

that
has

default

continues, 1st Source is entitled to “charge interest at the rate

the Collateral, including without limitation, fees, costs or expense of: . .
. (iii) inspection, appraisal or monitoring of the Collateral as Bank may
conduct for itself or obtain from a third party in its discretion, (iv)
exercising its rights herein or under applicable law to protect its interest
in the Collateral by performing obligations of Customer in the event Customer
fails to timely perform same, (v) taking possession of, holding, preparing
for sale or other disposition and selling or otherwise disposing of the
Collateral . . . All of the foregoing fees, costs, or expenses thus incurred
or expended by Bank, and any other monies paid by Bank to collect Customer’s
obligations under any Note or protect its interests in the Collateral shall,
at Bank’s option, for each instance of fees, cost or expense so incurred or
paid by Bank, either be added to the balance of the applicable Note or if
more than one Note, then pro-rated among the Notes, and be subject to all of
the provisions of this Agreement, or be paid immediately by Customer upon
demand by Bank, with interest accruing on the amount so demanded at the
Default Rate.” (DE #1-2, p. 2.)

8

set forth in the applicable Note plus three percent (3%) per annum
(the “Default Rate”).”

(Id.)4

On August 27, 2012, Dr. Falbo executed a Guaranty of Payment
(the “Guaranty”) in which he “unconditionally guarantee[d] . . .
the full and prompt payment and performance when due of all
Obligations due and to become due” to 1st Source by Montgomery
pursuant to the Loan Agreement.
defines

those

“Obligations”

(DE #1-3, p. 1.)
as

“all

existing

The Guaranty
and

future

indebtedness, liabilities and obligations of every kind, nature
and description . . . whether direct or indirect, absolute or
contingent, and whether now due and owing or hereafter due and
owing . . . .”

(Id.)

Dr. Falbo agreed that the Guaranty is

“absolute and unconditional, and nothing except final and full
performance of all of the Obligations shall operate to discharge
such liability.”

(Id.)5

In 2014, 1st Source discovered that the Aircraft was not
airworthy, and the Vice President of SFG, Richard Rozenboom (“Mr.
Rozenboom”),6 personally met with Dr. Falbo to discuss the status

4 The Note lists the interest as a fixed rate of 4.5% per annum. (DE #1-1,
p. 1.)
5 In his answer, Dr. Falbo admits to executing the Guaranty and
“unconditionally guarantee[ing] 1st Source payment of the Note in full when
due, and the obligations to 1st Source evidenced by the Note and the Loan . .
. Agreement.” (DE #14, p. 4.)
6 Mr. Rozenboom is also Vice President and Senior Work-Out Officer of 1st
Source. (DE #43-1, p. 1.)

9

of the Aircraft and the need to restore it to airworthy condition.
(DE #43-1, pp. 1-2.)

Montgomery and Dr. Falbo have admitted that

the Aircraft was not airworthy as of October 6, 2014.
#43-2, p. 1.)

(Id. & DE

At the meeting, Dr. Falbo agreed that Montgomery

was prepared to undertake whatever actions were necessary to repair
the Aircraft and return it to airworthy status.

(DE #43-2, p. 2.)

It was determined that Dr. Falbo had already engaged Paradise and
another affiliated company to repair the Aircraft and that an
invoice for work performed had been sent to Dr. Falbo prior to
October 3, 2014.

(DE #43-1, pp. 2-3, 7.)

Montgomery and Dr.

Falbo have admitted that the Aircraft was not airworthy and in
good repair from December of 2014 through May of 2015 but insist
that Montgomery was taking all action to make it airworthy during
that time.

(DE #43-2, pp. 2-3.)

Additionally, on June 19, 2015,

Paradise recorded a Verified Claim of Lien with the Broward County,
Florida Commission and with the Federal Aviation Administration
(“FAA”).

(Id. at 3 & DE #43-1, p. 3.)

Based on the foregoing, 1st Source determined that Montgomery
was in default and issued a DEMAND AND ACCELERATION NOTICE (the
“Notice”) to Montgomery and Dr. Falbo on May 29, 2015.
1, p. 3 & DE #1-4.)

(DE #43-

The amount due as of June 1, 2015, was

$796,778.85, but Dr. Falbo made additional payments after the

10

receipt of the Notice which were later applied to the balance of
the Note.

(Id.)

1st Source repossessed the Aircraft on July 22,

2015, with the intention to sell it once restored to airworthy
status.

(DE #43-1, pp. 3-4.)

1st Source assigned its rights,

title, and interest in the Note and Loan Agreement to SFG on
December 3, 3015.

(Id. at 4.)

In connection with repairing the Aircraft and attempting to
return it to airworthiness, 1st Source and SFG incurred expenses
and made payments to Paradise and other aviation related businesses
totaling $186,718.64, which were added to the principal amount of
the debt.

(Id. at 4, 10.)

Additionally, expenses were incurred

and payments were made to various parties totaling $144,366.20 for
maintenance program expenses, insurance, hangar, rent, and other
fees related to the Aircraft.

(Id. at 4, 11.)

1st Source and SFG

also incurred attorneys’ fees, litigation expenses, and costs
associated with the Aircraft and this case.

(Id. at 4.)

According to Mr. Rozenboom, “[a]fter repairs to the Aircraft
were completed, but before a return to service flight could be
undertaken to confirm the airworthy status of the Aircraft, one of
its wing structures was damaged by an unknown party.
of this incident in early September 2016.”

SFG learned

(Id. at 4-5.)

Because

such incidents are covered by its insurance, SFG does not intend

11

to charge Montgomery or Dr. Falbo with any costs related to the
damage of the wing structure of the Aircraft.

(Id. at 5.)

Due

to the foregoing circumstances, the Aircraft had not been sold as
of the date of the filing of the instant motion for summary
judgment, but SFG indicates that it “intends to sell the Aircraft
in

a

commercially

reasonable

manner”

and,

once

the

sale

is

complete, credit the net proceeds to any judgment entered in this
case.

(Id.)
SFG indicates that it retained the President of Aviation

Management Resources LLC, Delvin (Del) Fogg (“Mr. Fogg”), as an
expert to evaluate the condition of the Aircraft, estimate the
extent of the repairs, appraise the Aircraft, and prepare a report
in this case.
Mr.

Fogg

(Id.; see also DE #43-3.)

concluded

that

the

Aircraft

Among other findings,
had

not

been

properly

maintained or cared for over an extended period of time, and he
determined that the work subsequently performed by Paradise to
attempt

to

reasonable.

return

the

Aircraft

to

an

airworthy

status

was

(DE #43-3, pp. 2-3, 9-10.)

SFG maintains records regarding the status of its loans and
other

business

transactions

as

part

of

its

regular

business

operations, and it employs individuals to regularly monitor those
accounts and provide updates to SFG regarding their status.

12

(DE

#43-1, p. 5.)

In his official capacity as Vice President of SFG

and Senior Work-Out Officer of 1st Source, Mr. Rozenboom has access
to these types of records and has specifically reviewed the records
pertaining to Montgomery and Dr. Falbo.

(Id.)

Based on those

records, Mr. Rozenboom affirms that the amount due and owing to
SFG, “after taking into account all expenses of repairing and
preserving

the

[Aircraft],

but

litigation

and

costs,”

$1,549,433.39

is

exclusive

of
that

attorneys’
is

fees,

itemized

as

follows:
Principal:
Interest:
Late Fees:
Loan Fees:
Expenses:
(Id. at 5-6.)

$1,248,902.25
$ 116,324.27
$
39,804.67
$
36.00
$ 144,366.20

Interest also accrues after December 30, 2016, at

the Default Rate defined in the Loan Agreement.
DE #1-1; DE #43-1, p. 6.)

(DE #1-2, p. 2;

As part of its reply brief, SFG has

provided a supplemental affidavit of Mr. Rozenboom that reaffirms
the

aforementioned

amounts

due

and

provides

additional

clarification, by way of an exhibit, of how the principal balance
was calculated.

(DE #46-1.)

Finally, 1st Source and SFG incurred

attorneys’ fees, litigation expenses, and costs associated with
the

effort

to

enforce

their

rights

against

Montgomery;

SFG

indicates that it will petition the Court for those fees and

13

expenses following the entry of judgment.

(DE #43-1, p. 6; see

also DE #43, p. 7.)

Analysis
A federal court sitting in diversity must apply federal
procedural law and the appropriate state substantive law.

First

Nat. Bank and Trust Corp. v. Am. Eurocopter Corp., 378 F.3d 682,
689

(7th

Cir.

2004).

Here,

it

is

substantive law controls this dispute.

undisputed

that

Indiana

Section 3-308 of the UCC,

which has been adopted in Indiana, provides that “[i]n an action
with respect to an instrument, the authenticity of, and authority
to make, each signature on the instrument is admitted unless
specifically denied in the pleadings.”
308(a).

Ind. Code § 26-1-3.1-

Once the validity of the signatures are established or

proved, “a plaintiff producing the instrument is entitled to
payment

if

the

plaintiff

proves

entitlement

to

enforce

the

instrument under IC 26-1-3.1-301,7 unless the defendant proves a
defense or claim in recoupment.”

Ind. Code § 26-1-3.1-308(b).

7 A person entitled to enforce an instrument is either: “(1) the holder of
the instrument; (2) a nonholder in possession of the instrument who has the
rights of a holder; or (3) a person not in possession of the instrument who
is entitled to enforce the instrument under IC 26-1-3.1-309 or IC 26-1-3.1418(d).” Ind. Code § 26-1-3.1-301.

14

With regard to a guaranty, courts in Indiana have defined it
as “a conditional promise to answer for a debt or default of
another person.”

TW Gen. Contracting Serv., Inc. v. First Farmers

Bank & Trust, 904 N.E.2d 1285, 1288 (Ind. Ct. App. 2009).

As

such, “the guarantor promises to pay only if the debtor/borrower
fails to pay.”

Id.

A guaranty is interpreted using traditional

rules of contract law; specifically, a court must:
give effect to the intentions of the parties,
which are to be ascertained from the language
of the contract in light of the surrounding
circumstances.
Generally, the nature and
extent of a guarantor’s liability depends upon
the terms of the contract, and a guarantor
cannot be made liable beyond the terms of the
guaranty.
Nevertheless, the terms of a
guaranty should neither be so narrowly
interpreted as to frustrate the obvious intent
of the parties, nor so loosely interpreted as
to relieve the guarantor of a liability fairly
within their terms.
Additionally, writings
executed simultaneously and related to the
same transaction will be construed together in
determining
the
intent
underlying
the
contracts. In other words, the guaranty and
any other written agreements it incorporates
must be evaluated in conjunction with one
another in order to establish the parties’
intentions.
Id. (citing Bruno v. Wells Fargo Bank, N.A., 850 N.E.2d 940, 945–
46 (Ind. Ct. App. 2006)) (citations omitted and emphasis added by
citing court).

A continuing guaranty is one that “covers all

transactions, including those arising in the future, which are

15

within the contemplation of the agreement.”

S-Mart, Inc. v.

Sweetwater Coffee Co., Ltd., 744 N.E.2d 580, 585–87 (Ind. Ct. App.
2001).
Here,

the

following

facts

are

undisputed:

(1)

the

Loan

Agreement and Note are authentic, having been signed and executed
by Montgomery; (2) 1st Source was the original holder of the Note,
and SFG, as the assignee of 1st Source, is now entitled to enforce
the Loan Agreement and Note; (3) the Note is secured by the
collateral described in Section A, namely the Aircraft; (4) the
terms of the Loan Agreement and Note are unambiguous as to what
constitutes default; (5) Montgomery defaulted under the terms of
the Loan Agreement and Note by failing to keep the Aircraft in
good repair and operating condition from at least October 6, 2014
through May 29, 2015, by allowing Paradise to place a lien on the
Aircraft in June of 2015, and by failing to pay the entire amount
due after the debt was accelerated via the Notice; (6) Dr. Falbo
executed the Guaranty in which he unconditionally guaranteed full
and prompt payment and performance when due to 1st Source by
Montgomery pursuant to the Loan Agreement and Note; and (7) neither
Montgomery nor Dr. Falbo satisfied the obligations and debt owed
to SFG as of the date the motion for summary judgment was filed.
As such, the Court finds that the issue of liability under the

16

Loan Agreement, Note, and Guaranty has been conceded by Montgomery
and Dr. Falbo.
Rather than disputing liability, Montgomery and Dr. Falbo
argue that SFG has not met its burden, as the movant of the instant
summary judgment motion, of establishing the amount of damages.
Specifically, Montgomery and Dr. Falbo argue that SFG hasn’t
designated the necessary evidentiary documents to support its
claim for the principal balance, repair expenses, and non-legal
expenses.

This argument is a non-starter.

Montgomery and Dr.

Falbo misunderstand the burden-shifting requirements that have
been

articulated

by

the

Seventh

Circuit

Court

of

Appeals.

Specifically, “[a] party moving for summary judgment need not
introduce evidence rendering its opponents’ claims altogether
impossible in order to trigger the opponent’s burden to answer
with its own supporting evidence.”

Crawford v. Countrywide Home

Loans, Inc., 647 F.3d 642, 648 (7th Cir. 2011) (citing Celotex,
477 U.S. at 323).

Rather, “the burden on the moving party may be

discharged by ‘showing’—that is, pointing out to the district
court—that there is an absence of evidence to support the nonmoving
party’s

case.”

challenge[s]
opponent’s

the
claim

Id.

Where

factual
or

a

moving

support

defense

by

17

and

party
legal

providing

“comprehensively
soundness”
a

of

an

well-supported

statement of material facts it alleges are not in dispute, the
burden shifts to the non-movant to “introduce affidavits or cite
evidence in the record demonstrating what genuine issues remained
for trial.”

Id. (citations omitted).

Here, despite cursory

arguments to the contrary, 8 the Court finds that SFG provided
sufficient

proof

of

damages

to

have

shifted

the

burden

Montgomery and Dr. Falbo to dispute the amount presented.

to
Mr.

Rozenboom’s affidavit indicates that he has personal knowledge, by
virtue of his employment position, of the damages at issue in this
case, that the records he reviewed and relied on to determine that
amount were kept by SFG as part of its regular course of business,
and that, “taking into account all expenses of repairing and
preserving the collateral,” $1,549,433.39 is due on the loan as of
December 16, 2016.

This affidavit, plus the spreadsheets attached

to it, along with Mr. Fogg’s affidavit and report, is the type of
admissible evidence that Rule 56 contemplates.

See Fed. R. Civ.

P.

his

56(c)(1)(A)

“including

(a

moving

depositions,

party

may

documents,

support

position

electronically

by

stored

information, affidavits or declarations, stipulations (including

8 Montgomery and Dr. Falbo state, without further analysis, explanation, or
evidentiary support of their own, “if there is a question about the principal
amount, then there is a question about the amount of interest due. SFG’s
evidence leaves Montgomery asking how the principal was calculated because it
certainly doesn’t provide that information for Montgomery or the court.” (DE
#45, p. 5.)

18

those

made

for

purposes

of

the

motion

only),

admissions,

interrogatory answers, or other materials”); see also Fed. R. Civ.
P. 56(c)(4) (“An affidavit or declaration used to support or oppose
a motion must be made on personal knowledge, set out facts that
would be admissible in evidence, and show that the affiant or
declarant

is

competent

to

testify

on

the

matters

stated.”).

Montgomery and Dr. Falbo claim that the numbers “just don’t add
up” with regard to the principal delineated on the Notice and the
repair

costs

Rozenboom’s

provided

on

affidavit;

the

spreadsheets

however,

the

Court

attached

Mr.

that

notes

to

Mr.

Rozenboom’s initial affidavit does not specifically indicate that
the costs shown on the spreadsheets were all inclusive.

Rather,

in summarizing the final amount due in paragraph twenty-nine of
his

affidavit,

Mr.

Rozenboom

cites

to

the

records

reviewed

generally and states that the final itemized numbers have “tak[en]
into account all expenses” (emphasis added).

As pointed out by

SFG, the fact that costs continued to accrue related to the
Aircraft

after

the

Notice

was

issued

is

not

surprising.

Additionally, in reply, SFG produced a supplemental affidavit of
Mr.

Rozenboom

paragraph
additional

that

reaffirms

twenty-nine

of

clarification,

his
by

the

total

original
way

19

of

amount

referenced

affidavit
a

detailed

and

in

provides

spreadsheet

attached as an exhibit, as to how that amount was calculated.
Regardless,

if

they

wished

to

challenge

the

damages

amount

presented in SFG’s well-supported motion for summary judgment,
Montgomery

and

Dr.

Falbo

were

required

to

submit

their

own

affidavits or cite to other admissible evidence within the record
to show that a genuine dispute exists.

They simply did not do so.

Finally, although Montgomery and Dr. Falbo argue that they
“shouldn’t be required to continue to pay interest and storage
fees on an aircraft that was repaired and ready for sale,” they do
not cite to a single piece of evidence or any relevant case law
for this position.

First, as SFG points out, the contentions that

the Aircraft was deemed “airworthy” and “ready for sale” by
September of 2016 and that SFG “may have had a buyer” at that time
are without factual support in the record.
Dr.

Falbo’s

assertion

to

the

contrary,

Despite Montgomery and
the

Notice

and

Mr.

Rozenboom’s affidavit simply indicate that SFG “intend[ed]” to
sell the Aircraft “sometime” after August 16, 2015; these documents
do not establish that the Aircraft was airworthy or that SFG had
definite buyers prepared to purchase the Aircraft.

In fact, Mr.

Rozenboom’s affidavit specifically states that, while the repairs
had been completed at some point, the wing was damaged before the
test

flight

to

confirm

airworthiness

20

could

be

undertaken.

Montgomery and Dr. Falbo have not submitted any evidence to the
contrary.
Moreover, while Montgomery and Dr. Falbo claim that their
obligations of repayment for repairs, storage costs, other fees,
and interest related to the Aircraft do not extend beyond August
of 2016 because the initial repairs had been made by that time,
the record belies this claim.

The Loan Agreement and Note are

clear and unambiguous, and the Guaranty unconditionally guarantees
payment of all such related costs and expenses.

Nothing in the

aforementioned documents limits the amount of damages in the way
suggested by Montgomery and Dr. Falbo.

The express terms of the

Loan Agreement state that Montgomery is responsible for “any fees,
costs, expenses, penalties, or interest” incurred in connection
with the Loan Agreement; specifically, the Loan Agreement provides
for recovery of all costs related to “taking possession of,
holding, preparing for sale or other disposition and selling or
otherwise disposing of the [Aircraft].”

It does not establish a

timeframe within which the Aircraft must be sold upon repossession,
nor does it limit the recovery of costs incurred or the collection
of interest until the Aircraft is sold or a judgment is entered.
As to Dr. Falbo specifically, he signed the Guaranty, the plain
language of which makes him responsible for the unlimited, ongoing

21

liabilities of Montgomery.

See TW Gen. Contracting Services,

Inc., 904 N.E.2d at 1290.
Thus, the Court GRANTS the motion for summary judgment and
finds that SFG is entitled to summary judgment against Montgomery
and

Dr.

Falbo,

jointly

and

severally,

in

the

amount

of

$1,549,433.39, with prejudgment interest to be computed at the
Default Rate from December 30, 2016, through the date of this Order
or the date the aforementioned debt was satisfied in full by
Montgomery or Dr. Falbo, whichever is earlier, plus attorneys’
fees, litigation expenses, and costs.

The Court ORDERS SFG to

submit proposed forms of judgment consistent with this Court’s
findings by January 30, 2018.
entered,

SFG

may

file

a

After final judgment has been

motion

under

Federal

Rule

of

Civil

Procedure 54(d)(2) and Northern District of Indiana Local Rule 541, seeking recovery of attorneys’ fees, litigation expenses, and
costs.

Motion to Dismiss
As noted in the background section above, SFG filed a motion
to dismiss the pending claims against Paradise pursuant to Federal
Rule of Civil Procedure 41(a)(2).

(DE #47.)

Neither Montgomery

nor Dr. Falbo have filed a response to the motion to dismiss.

22

Rule 41(a)(2) provides that an “action may be dismissed at
the plaintiff’s request only by court order, on terms that the
court considers proper.”

Fed. R. Civ. P. 41(a)(2).

otherwise stated, such dismissal is without prejudice.

Unless
Id.

The

Seventh Circuit has delineated several factors for a district court
to consider when determining whether a plaintiff’s motion for
voluntary dismissal should be denied, including “the defendant’s
effort and expense of preparation for trial, excessive delay and
lack of diligence on the part of the plaintiff in prosecuting the
action, insufficient explanation for the need to take a dismissal,
and the fact that a motion for summary judgment has been filed by
the defendant.”
1969).

Pace v. S. Exp. Co., 409 F.2d 331, 334 (7th Cir.

Rather than being mandatory, however, the factors are

simply a guide for the trial court judge, with whom discretion
ultimately rests, to consider.

Tyco Laboratories, Inc. v. Koppers

Co., Inc., 627 F.2d 54, 56 (7th Cir. 1980).
discretion

the

court

follows

the

“In exercising its

traditional

principle

that

dismissal should be allowed unless the defendant will suffer some
plain legal prejudice other than the mere prospect of a second
lawsuit.”

Stern v. Barnett, 452 F.2d 211, 213 (7th Cir. 1971)

(citation omitted).

23

Here,

all

of

the

factors

weigh

in

favor

of

dismissal.

According to SFG, Paradise was named as a defendant in this action
solely because of the lien it had placed on the Aircraft.

Paradise

never entered an appearance, and default was entered against it on
October 6, 2015 (DE #16), so it is undisputed that Paradise neither
incurred any effort or expenses in preparation for trial nor filed
any motions on its own behalf.

Both 1st Source and later SFG have

been diligent in prosecuting this case since its inception.

Plus,

SFG’s explanation for the need to take a dismissal, namely that it
is unnecessary to seek an entry of judgment against Paradise
because its claim of lien was released on January 7, 2016 (see DE
#47, pp. 4-5), is persuasive.

Finally, neither Montgomery nor Dr.

Falbo have responded with any reason why the dismissal of Paradise
would be inappropriate in these circumstances.

Thus, the Court

hereby GRANTS the motion to dismiss and DISMISSES the claims
against Paradise without prejudice.

CONCLUSION
For the reasons set forth above, the motion for summary
judgment (DE #42) is GRANTED.

The Court ORDERS SFG to submit

proposed forms of judgment, consistent with this Court’s findings,
by January 30, 2018.

In addition, the motion to dismiss (DE #47)

24

is GRANTED, and the claims against Paradise are hereby DISMISSED
without prejudice.

ENTERED: January 16, 2018

/s/RUDY LOZANO, Judge
United States District Court

25