In Re: ClassicStar Mare Lease Litigation MDL No. 1877

Filing 2458

MEMORANDUM OPINION & ORDER: (1) Plts' (142 in 5:08-cv-00496-JMH-REW, 1696 in 5:07-cv-00353-JMH-REW) MOTION for Summary Judgment GRANTED IN PART and DENIED IN PART; (2) Plts shall have 10 DAYS to show cause why Sixth Cause of Action for Unjust Enrichment against CFSI should not be dismissed w/ predjudice. Signed by Judge Joseph M. Hood on 4/6/2012.Associated Cases: 5:07-cv-00353-JMH-REW, 5:08-cv-00496-JMH-REW(STB)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON

IN RE CLASSICSTAR MARE LEASE
LITIGATION
PETER FORTENBAUGH, et al.,
Plaintiffs,
v.
GEOSTAR CORPORATION, et al.,
Defendants,

)
MDL No. 1877
)
)
Master File:
)
) Civil Action No. 5:07-cv-353-JMH
)
)
)
) Civil Action No. 5:08-496-JMH
)
)
)
)
)
)

MEMORANDUM OPINION & ORDER
*** *** ***
This matter is before the Court upon the Motion for Summary
Judgment filed by Plaintiffs Peter Fortenbaugh and Betty Lee,
individually, and in their capacity as Trustees of the Peter
Fortenbaugh

Trust,

a

California

Trust,

against

ClassicStar Financial Services, Inc. (“CFSI”) [DE 142].

Defendant
In light

of Plaintiffs’ agreement to dismiss their claims against Defendants
GeoStar Corporation,

GeoStar Financial Services Corporation, and

Tony Ferguson, the Court considers only their arguments with
respect to Count V of their Complaint in which they aver that CFSI
breached

the

parties’

Equine

and

Working

Interest

Purchase

Agreement.1

Defendant

CFSI

has

filed

no

response.

Having

considered the motion, the relevant law, and the undisputed facts,
the Court concludes that summary judgment in favor of Plaintiffs is
appropriate and the motion shall be granted. It shall be denied as
moot with respect to the arguments made as to the now-dismissed
defendants.
Summary judgment is appropriate 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 exists if “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).

“On summary

judgment the inferences to be drawn from the underlying facts ...
must be viewed in the light most favorable to the party opposing
the motion.”
(1962).

United States v. Diebold, Inc., 369 U.S. 654, 655

While the moving party must demonstrate that no genuine

issue of material fact exists, in response, the non-moving party
must move beyond the pleadings and present evidence in support of
its claim.

Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

“Conclusory assertions, supported only by Plaintiff's own opinions,
cannot withstand a motion for summary judgment.”

1

Arendale v. City

Plaintiffs have reached an agreement to dismiss all claims
against Defendants GeoStar Corporation, GeoStar Financial Services
Corporation, and Tony Ferguson.
Accordingly, the Motion for
Summary Judgment with respect to those Defendants is denied as
moot.
2

of Memphis, 519 F.3d 587, 605 (6th Cir. 2008
In

the

Plaintiffs

instant
invested

matter,
in

a

there

are

mare-lease

no

disputed

business

facts.

venture

with

ClassicStar, LLC. Then, in 2002, Plaintiffs converted a portion of
their

interests

interests.

in

the

mare-lease

program

into

gas

working

Beginning in 2004, Plaintiffs began negotiations to

sell their mare lease interests and their gas working interests.
On September 30, 2005, Plaintiffs and CFSI executed a purchase
agreement pursuant to which Plaintiffs would assign their mare
lease and gas working interests to CFSI, which was accomplished by
virtue of §§ II.A and II.B.5 of the Purchase Agreement.

In

exchange, CFSI agreed to pay Plaintiffs $6.1 million plus 6 percent
interest, which began to accrue on September 1, 2005, according to
a schedule set forth in the Purchase Agreement and to assume
certain debt as specified in the Purchase Agreement.

Geostar, on

behalf of CFSI, made the first payment due under the Purchase
Agreement, although it was made four months late.
payments were made by CFSI or anyone on its behalf.

No further
As of today,

$5,782,175.97 of the principal remains unpaid.
In order to obtain summary judgment on their claim for breach
of contract, Plaintiffs must demonstrate with undisputed evidence
(1) that there exists a contract between the parties, (2) that the
terms of the contract required performance of a certain action, (3)
that a breach occurred, i.e., that said action did not occur, and

3

(4) that the breach caused injury to them. Synthes Spine Co., L.P.
v. Calvert, 270 F. Supp. 2d 939, 942 (E.D.Mich. 2003) (citing
Webster v. Edward D. Jones & Co., 197 F.3d 815, 819 (6th Cir. 1999)
(applying Michigan law).2
The

Fortenbaugh

Plaintiffs

have

submitted

declarations,

documents, and admissions by Defendant supporting the conclusion
that

CFSI

entered

into

a

Purchase

Agreement

with

the

Peter

Fortenbaugh Trust in which CFSI agreed to pay an amount certain in
exchange for the Trusts’ interests described above, that the Trust
fulfilled its obligations under the Purchase Agreement by assigning
the relevant interests to CFSI, and that CFSI then failed to pay
the entire amount that it owed to the Trust as agreed, with the
exception of one payment.

Further, no one disputes and the Court

concludes from the evidence presented that the principal amount due

2

The Purchase Agreement specifies that it shall be enforced
“under the laws of the State of Michigan.” The Court has,
therefore, applied the laws of Michigan in analyzing Plaintiffs’
claim but notes that even if it applied the law of California (or
even Kentucky), the law of which might be seen to govern the case
in the absence of the application of Michigan law, the result would
be the same. See Oasis West Realty, LLC v. Goldman, 250 P.3d 1115,
1121 (Cal. 2011) (elements of cause of action for breach of
contract are “(1) the existence of the contract, (2) plaintiff's
performance or excuse for nonperformance, (3) defendant's breach,
and (4) the resulting damages to the plaintiff”); Barnett v. Mercy
Health Partners-Lourdes, Inc., 233 S.W.3d 723, 727 (Ky. Ct. App.
2007) (elements of claim are existence of contract, breach of
contract, and damages).
The terms of the Purchase Agreement also provide that venue
and jurisdiction for disputes lies in the State of Michigan. CFSI,
however, has not challenged venue or jurisdiction in either this
Court or the transferor court in light of that provision.
4

and owing under the Purchase Agreement is $5,782,175.97, plus
interest, and that the Trust has suffered damages as a result of
CSFI’s failure to remit this amount.
The Court turns, then, to the calculation of damages.

There

is no dispute that the principal amount due under the Purchase
Agreement, less the single payment made, is $5,782,175.97 and that
this amount has not been paid.

Nor is it disputed that, by the

terms of the agreement, that interest in an amount of 6% per annum
was

due

on

that

amount,

beginning

on

September

1,

2005.

Multiplying the amount due by the annual interest rate of 6% and
dividing it by 365 one arrives at the daily interest accruing on
the amount owed in the calendar years 2005, 2006, 2007, 2009, 2010,
and 2011: $950.49.

Multiplying the amount due by the annual

interest rate of 6% and dividing it by 366 one arrives at the daily
interest accruing on the amount owed in the calendar years 2008 and
2012 (each being a “leap year”): $947.89.

Adding together the

number of days on which interest is owed for 2005, 2006, 2007,
2009, 2010, and 2011, multiplied by $950.49, and the number of days
on which interest is owed for 2008 and from the beginning of 2012
through

today’s

date,

multiplied

interest owed of $2,173,517.32.

by

$947.89,

one

arrives

at

Adding together the principal

amount due, less the single payment made, and the interest accrued
daily from September 1, 2005 through the present date, one arrives
at a total amount owed of $7,955,693.29, the amount of damages to

5

date.
Upon the Court’s own motion, however, Plaintiffs’ Sixth Cause
of Action for Unjust Enrichment against CFSI will be dismissed
since it cannot survive the decision to grant summary judgment in
favor of Plaintiffs with respect to the breach of contract. Simply
stated, since Plaintiffs, in their capacity as the Trustees of the
Peter Fortenbaugh Trust, may recover from CFSI in contract, there
is no reason to consider whether Plaintiffs should recover against
the same party in quasi-contract.
Detroit,

666

N.W.2d

271

(2003)

See Belle Isle Grill Corp v.
(contract

to

prevent

unjust

enrichment will be implied “only if there is no express contract
covering the same subject matter” and summary disposition of unjust
enrichment

claim

is

properly

granted

where

there

is

express

contract covering same subject matter); Klein v. Chevron U.S.A.,
Inc., 137 Cal. Rptr. 3d 293, 330-31 (Cal. Ct. App. 2012) (“A
plaintiff may not, however, pursue or recover on a quasi-contract
claim if the parties have an enforceable agreement regarding a
particular

subject

matter.”);

see

also

Killian

v.

Tunacakes

Properties, Inc., No. 2010-CA-001396-MR, 2012 WL 162717, 3 (Ky.
App. Jan. 20, 2012) (quoting Sparks Milling Co. v. Powell, 143
S.W.2d 75, 76 (1940)) (when “an express contract is made defining
the

circumstances

under

which

an

obligation

may

arise

with

reference to a certain subject matter such contract excludes the
possibility of an implied contract concerning the same matter.”).

6

Accordingly, IT IS ORDERED:
(1)

that Plaintiffs’ Motion for Summary Judgment [DE 142] is

GRANTED IN PART and DENIED AS MOOT in part;
(2)

that Plaintiffs shall have TEN (10) DAYS from entry of

this Order to show cause why their Sixth Cause of Action for Unjust
Enrichment against CFSI should not be dismissed with prejudice for
the reasons stated above.
This the 6th day of April, 2012.

7