Keybank, N.A. v. Hartmann et al
MEMORANDUM OPINION & ORDER: 1. Plaintiff KeyBank's Renewed Motion for Summary Judgment [R. 51 ] is GRANTED; 2. Summary Judgment is awarded in favor of KeyBank and against Randall and Evonne Hartmann, jointly and severally, in the amount of 36;1,383,372.73, as of October 22, 2013, plus per diem interest of $189.40 per diem from that date until entry of judgment; 3. Reasonable attorneys fees and costs shall be awarded to KeyBank in an amountto be determined upon KeyBanks submission of a separate fee application; and4. All other matters being settled, the Final Pretrial Conference in this case that is currently scheduled for March 3, 2014, and the Jury Trial scheduled for April 7, 2014, in London, Kentucky are hereby CANCELLED. 5. The Court will enter an appropriate Judgment contemporaneously herewith. Case Terminated. Signed by Judge Gregory F. Van Tatenhove on 2/18/2014.(RBB)cc: COR, London Court Diary
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
RANDALL T. HARTMANN, and
EVONNE D. HARTMANN,
Civil No. 12-49-GFVT
*** *** *** ***
This matter is before the Court upon the renewed Motion for Summary Judgment filed by
Plaintiff, KeyBank, N.A. against Defendants Randall T. Hartmann and Evonne D. Hartmann.
The Court previously denied summary judgment to KeyBank, but since that time, the parties
have conducted further discovery, and KeyBank has refined its arguments in light of the Court’s
previous ruling. It is now apparent that no genuine factual dispute remains, and for the reasons
set forth below, KeyBank’s Motion for Summary Judgment is GRANTED.
Lake Cumberland Marine, LLC (“LCM”),was a retailer of and provider of related
services for luxury boats. [R. 51-1 at ¶ 6.] Defendant Randall Hartmann was listed as LCM’s
managing member, while Defendant Evonne Hartmann was identified as the owner of all of
LCM’s stock. [R. 1-2 at 48.] Plaintiff Keybank is a national banking association that entered into
certain financing agreements with LCM and with the Hartmanns, beginning in 2005. [R. 51-3 at
2-5.] As amended in 2006, KeyBank’s agreement with LCM consisted of a demand floor plan
that included a line of credit up to ten million dollars ($10,000,000), in exchange for granting
KeyBank a security interest in an extensive array of LCM’s business assets.1 [Id. at 3-4.]
Randall and Evonne Hartmann each personally and unconditionally guaranteed all obligations of
LCM to KeyBank. [R. 51-1 at ¶¶ 7-8, Ex. A & B.] KeyBank then perfected its security interests
in LCM’s assets by filing a Uniform Commercial Code (“UCC”)-1 Financing Statement with the
Kentucky Secretary of State. [R. 51-3 at 4; R. 51-1 at ¶11, Ex. D.]
LCM reportedly stopped making interest payments on its debt in September 2008, and
failed to make any principal payments after June 2009. [R. 51-3 at 6.] In July 2009, LCM filed
a voluntary bankruptcy petition. [Id.] KeyBank filed its proof of claim in the bankruptcy
petition, establishing a secured claim for a debt totaling $2,400,711.14 owed to KeyBank. [Id. at
6]. By a subsequent agreed order, KeyBank took possession of and liquidated LCM’s inventory
collateral in which it held a secured interest. [Id.] That collateral consisted of nine luxury
yachts, two of which LCM sold “out of trust” before filing for bankruptcy and did not convey
any of the sale proceeds to KeyBank. [Id. at 7; R. 51-1, Exhs. H, K, M.] LCM sold one of the
yachts shortly after filing for bankruptcy, and KeyBank recovered the proceeds from it. [R. 51-1,
“Floor plan financing is a revolving line of credit wherein loans are made against” specific pieces of collateral.
United States v. May, 2012 WL 4069585, at *1 n.1 (6th Cir. Sept. 17, 2012) (quoting another source). “When each
piece of collateral is sold by the dealer, the loan advance against that collateral is repaid.” Id. The parties’ agreement
aligns with that definition. [See R. 14-2 at 88; see also R. 14-2 at 75-98 (including both the most recent iteration of
the agreement and a previous version).]
Exhs. H, Q.] KeyBank sold the six remaining yachts through third-party brokers, and recovered
$1,294,250.00 in net sale proceeds, after deducting $145,250.00 in broker’s fees and costs. [Id.,
Exhs. H, I, L, N-P.] After KeyBank disposed of LCM’s assets that it controlled, a balance of
$1,261,190.13 remained as an unsecured claim. [Id. at ¶ 18, Ex. G.] After further negotiations,
the parties agreed that LCM owed KeyBank $1,104,989.86 in outstanding debt. [Id. at ¶ 19, Ex.
H.] This agreed amount was approved by the Eastern District of Kentucky Bankruptcy Court,
and an agreed order to that effect was filed on November 5, 2010. [Id.] Despite the agreement,
KeyBank was unsuccessful in seeking payment for the deficient amount from the Hartmanns,
pursuant to their personal guaranties. KeyBank alleges, and the Hartmanns do not deny, that
since the time of the agreed order, the Hartmanns have not made any payments to KeyBank in
their capacities as guarantors, and the interest on their debt has continued to accrue. [R. 51-1 at
¶¶ 36, 46-47.]
Consequently, KeyBank filed a claim in this Court for breach of contract in order to
pursue the remaining amount from the Hartmanns based on their guaranties. In July 2012,
KeyBank moved for summary judgment, which this Court denied. See Mem. Opinion & Order
(March 27, 2013). [R. 38.] In denying summary judgment, the Court held that the agreed order
in the bankruptcy proceeding had no preclusive effect in this lawsuit; that Ohio law governed the
loan documents; that under Article 9 of the UCC, obligors cannot waive the defense of
commercial reasonableness, which the Hartmanns had raised as an affirmative defense; and that
there was a genuine issue of material fact concerning whether KeyBank had disposed of the
collateral in a commercially reasonable manner. Id. Accordingly, the parties engaged in further
discovery, particularly on the issue of commercial reasonableness, and the time for discovery has
In October 2013, KeyBank renewed its motion for summary judgment on slightly
different grounds. [R. 51.] Neither Randall nor Evonne Hartmann have responded to KeyBank’s
motion for summary judgment, and the time in which to do so has long since expired. Under the
Local Rules for the Eastern District of Kentucky, “[f]ailure to timely respond to a motion may be
grounds for granting the motion.” LR 7.1(c); see also Humphrey v. U.S. Attorney General’s
Office, 279 Fed. App’x 328, 331 (6th Cir. 2008) (recognizing that in certain instances a party’s
lack of response to a motion or argument may be grounds for the district court to assume that the
non-moving party waives opposition and grant the motion). However, in cases involving
motions for summary judgment, a lack of response to the motion does not lessen the burden of
the moving party to demonstrate the absence of a genuine issue of material fact, nor does the lack
of response lessen the burden of the Court “to examine the movant’s motion . . . to ensure that he
has discharged that burden.” Carver v. Bunch, 946 F.2d 451, 454-55 (6th Cir. 1991).
Summary judgment is appropriate where “the pleadings, discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2); Celotex
Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). “A genuine dispute exists on a material fact, and
thus summary judgment is improper, if the evidence shows ‘that a reasonable jury could return a
verdict for the nonmoving party.’” Olinger v. Corp. of the President of the Church, 521 F. Supp.
2d 577, 582 (E.D. Ky. 2007) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)). Stated otherwise, “[t]he mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which the jury could
reasonably find for the plaintiff.” Anderson, 477 U.S. at 252.
The moving party has the initial burden of demonstrating the basis for its motion and
identifying those parts of the record that establish the absence of a genuine issue of material fact.
Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). The movant may satisfy its
burden by showing “that there is an absence of evidence to support the non-moving party’s
case.” Celotex Corp., 477 U.S. at 325. Once the movant has satisfied this burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to demonstrate
there is a genuine issue of material fact in dispute. Hall Holding, 285 F.3d at 424 (citing Celotex
Corp., 477 U.S. at 324). In applying the summary judgment standard, the Court must review the
facts and draw all reasonable inferences in favor of the non-moving party. Logan v. Denny’s,
Inc., 259 F.3d 558, 566 (6th Cir. 2001) (citing Liberty Lobby, 477 U.S. at 255).
Here, the Hartmanns have not responded or otherwise opposed KeyBank’s motion for
summary judgment. Their lack of response is not necessarily grounds for the Court to
automatically grant KeyBank summary judgment. Rather, in such a situation, "the court must
review carefully those portions of the submitted evidence designated by the moving party.”
Guarino v. Brookfield Twp. Trustees, 980 F.2d 399, 410 (6th Cir. 1992). The Court, however, is
not required to “sua sponte comb the record from the partisan perspective of an advocate for the
non-moving party. Rather, in the reasoned exercise of its judgment the court may rely on the
moving party’s unrebutted recitation of the evidence . . . in reaching a conclusion that certain
evidence and inferences from evidence demonstrate facts which are ‘uncontroverted.’” Id. Once
the Court determines that the moving party has met its burden, then the lack of response from the
non-moving party becomes fatal to its case and the Court may enter judgment in favor of the
This action is in federal court on the basis of diversity jurisdiction because the Hartmanns
are citizens of Kentucky, KeyBank is a citizen of Ohio, and the amount in controversy is clearly
over $75,000. 28 U.S.C. § 1332(a). This Court previously concluded that Ohio law governed
the parties’ agreement and would accordingly be applied in this case.2 See Mem. Opinion &
Order [R. 38] at 7-8.
KeyBank contends that it is entitled to summary judgment because 1) there is no dispute
of genuine material fact concerning LCM’s default on its loan obligations or the Hartmanns’
breach of their obligations as guarantors of the loans at issue; 2) there is no dispute as to
KeyBank’s damages; and 3) there is no dispute that KeyBank repossessed and disposed of the
collateral at issue in a commercially reasonable manner as required by Article 9 of the Uniform
Commercial Code. Secondly, KeyBank contends that it is entitled to recover reasonable
attorneys’ fees and costs associated with enforcing its rights against the Hartmanns in this matter.
Ohio law was identified in the parties’ agreement as the law that should be utilized. The Court has already found
there was a reasonable basis for the selection of Ohio law, and consequently, its application in this case. See Moses
v. Baker, 798 F. Supp. 2d 863, 866 n.1 (E.D. Ky. 2011) (citing Wallace Hardware Co. v. Abrams, 223 F.3d 382, 398
(6th Cir. 2000)).
As explained in the Court’s prior opinion, this is essentially an action for breach of
contract, albeit one governed by Article 9 of the Uniform Commercial Code. As such, KeyBank
must establish “by a preponderance of the evidence (1) that a contract existed, (2) that
[KeyBank] fulfilled its obligations, (3) that [the Hartmanns] failed to fulfill [their] obligations,
and (4) that damages resulted from this failure.” Telxon Corp. v. Smart Media of Delaware, Inc.,
2005 WL 2292800, at *20 (Ohio Ct. App. Sept. 21, 2005) (citation omitted). As a threshold
matter, no one disputes that a contract existed between KeyBank and the Hartmanns. Indeed,
there is no dispute that the Hartmanns guaranteed LCM’s obligations to KeyBank, or that as the
primary obligor, LCM subsequently defaulted on those obligations to KeyBank.
The parties also do not dispute that the Hartmanns have failed to fulfill their obligations
by paying KeyBank what LCM owes. The guaranties in their simplest terms provided that each
Defendant “unconditionally and absolutely guaranties the punctual and full payment when due,
by acceleration or otherwise, of all such credit and/or obligations” incurred by LCM. [R. 51-1,
Exhs. A & B.] Additionally, “all settlements, compromises, compositions, accounts stated and
agreed balances with regard to any of the liabilities made in good faith between [KeyBank and
LCM] shall be binding” upon Defendants. [Id.]. This Court has previously found that the
guaranty agreements signed by the Hartmanns are governed by Article 9, codified at Ohio Rev.
Code (ORC) § 1309, and that the Hartmanns are each an obligor as defined by ORC §
1309.102(59)(a). See Mem. Opinion & Order [R. 38] at 8. An absolute and unconditional
guaranty means that the guarantor becomes “liable immediately upon default of the principal
without notice,” and “casts no duty upon the creditor or holder of the obligation to attempt
collection from the principal debtor before looking to the guarantor.” United States v. Willis, 593
F.2d 247, 254 (6th Cir. 1979) (internal quotations omitted). Accordingly, upon LCM’s default,
the Hartmanns as guarantors owed payment to KeyBank. The Hartmanns have not disputed that
they owe this obligation, nor that they have thus far failed to fulfill it.
There also does not appear to be a genuine dispute as to the amount of damages sustained
by KeyBank as a result of the Hartmanns’ breach. The Court previously ruled that the amount of
damages set by the agreed order in the bankruptcy proceeding has no preclusive effect in this
lawsuit,3 and, accordingly, KeyBank states that it is not relying on that order as the sole proof of
damages. Rather, KeyBank has demonstrated its damages in this proceeding “based on the
underlying loan documents, using the outstanding principal balance and accrued interest due
upon LCM’s bankruptcy filing, subtracting its net recovery from disposing of the collateral, and
adding in additional default interest that has accrued to date.” [R. 51-3 at 14.] In support of this
contention, KeyBank has submitted a detailed accounting of its damages before and after it
successfully repossessed and sold the collateral at issue, including detailed worksheets and
calculations. [See R. 51-1 at ¶¶ 7-9, 11-20, 24-36, & Exhs. H-Q.] In particular, KeyBank alleges
In its previous opinion, the Court noted that the two-page agreed order looked like an agreement reached by the
parties rather than an issue that was actually litigated or determined by a court after hearing supporting evidence on
the matter. Mem. Opinion & Order [R. 38] at 5-6. Moreover, the Court noted the agreement itself stated that it
would “not affect the rights of any other party in interest,” and concluded the parties did not intend the agreement to
have preclusive effect. Id. at 6.
that the Hartmanns owe a total amount of $1,383,372.73. That amount includes $292,432.57 in
accrued interest based on a default interest rate of 6.250% and a per diem interest of $189.40. [R.
51-3 at 15.] The Court notes in particular that the Hartmanns have not disputed the amount of
damages, either in this motion for summary judgment or previously, and the Court sees no reason
to question the calculations KeyBank has submitted. The Hartmanns’ only contention and sole
defense4 is the issue of commercial reasonableness, which is discussed below.
The only apparent issue for the Court to decide in this case is whether KeyBank has
fulfilled its obligations under the contract – more specifically, whether KeyBank has disposed of
the collateral in a commercially reasonable manner as required by Article 9 of UCC. At the
outset, the Court notes once again that the Hartmanns have not responded to KeyBank’s
arguments, and that in analyzing this issue, the Court has considered the arguments presented by
KeyBank in light of the legal standard and in light of the affirmative defense the Hartmanns
previously raised, which the Court found constituted a genuine factual dispute at the time of the
prior summary judgment motion. As will be explained below, the concerns which the Court
expressed when ruling on the previous summary judgment motion have been adequately
addressed by KeyBank, and based on the facts presented at this time, the Court finds that there is
no longer any dispute as to a material fact.
The UCC, as codified by Ohio law, requires a secured party to ensure that “[e]very aspect
of a disposition of collateral, including the method, manner, time, place, and other terms must be
This defense is one that was raised previously in this litigation. The Hartmanns have not responded to the motion
presently before the Court, nor have they raised any specific defense to KeyBank’s renewed motion.
commercially reasonable.” ORC §1309.610(B). However, as long as the disposition is
commercially reasonable, “a secured party may dispose of collateral by public or private
proceedings, by one or more contracts, as a unit or in parcels, at any time and place, and on any
terms.” Id. When the commercial reasonableness of a sale is disputed, the party seeking
affirmative relief, which is usually the secured party, “has the burden of establishing that the . . .
disposition . . . was conducted in accordance with” Sections 1309.601—1309.628. ORC
§1309.626(B); Ramsey v. Ernoko, Inc., 74 Ohio App. 3d 749, 755 (1991). According to statute,
a disposition of collateral “is made in a commercially reasonable manner if the disposition is
made: (1) [i]n the usual manner on any recognized market; (2) [a]t the price current in any
recognized market at the time of disposition; or (3) [o]therwise in conformity with reasonable
commercial practices among dealers in the type of property that was the subject of the
disposition.” ORC §1309.627(B). Whether the disposition is commercially reasonable “will
turn upon all the facts in a particular case. Price alone is not the determinative factor.”
Huntington Nat’l Bank v. Elkins, 559 N.E.2d 456, 458 (1990). The primary focus of a court in
analyzing commercial reasonableness must be the procedures used, including “the method,
manner, time, place and terms.” Id.
Here, the Hartmanns raised the issue of commercial reasonableness in their Answer, [R.
11 at 1] and, when denying KeyBank’s initial motion for summary judgment, the Court found
that a factual dispute on the issue of commercial reasonableness remained, largely because
KeyBank had produced no evidence to establish that its disposition of the yachts was
commercially reasonable. See Mem. Opinion & Order [R. 38] at 9. Now, however, KeyBank
has presented a detailed explanation with supporting documentation to establish the commercial
reasonableness of its disposition, and the Hartmanns have offered nothing to refute it.
KeyBank apparently sold the yachts through “a series of private sales to third party
purchasers, using the services of boat brokers whom it deemed reliable and trustworthy.” [R. 513 at 17.] According to KeyBank, LCM initially offered to broker a sale of six of the yachts to an
“unidentified purchaser” in exchange for an 8% commission. [Id.; R. 51-1 at ¶¶25, 41.]
KeyBank, however, declined LCM’s offer primarily because KeyBank did not think LCM was
trustworthy or reliable. [R. 51-3 at 17.] Specifically, LCM had sold some of the collateral out of
trust two months before filing for bankruptcy, LCM did not identify who the purchaser was, and
LCM’s demand for a broker fee violated the Stay Relief Order in the bankruptcy proceeding. [Id.
at 17-18; R. 51-1, Exhs. R and G.] KeyBank therefore chose to sell the collateral by using
different brokers, and consequently obtained $85,430.09 more than what LCM offered to sell the
yachts for. [R. 51-3 at 17-18; R. 51-1, Ex. H.] KeyBank thus used the same manner of selling
the collateral that LCM had proposed,5 except for using different brokers who KeyBank
considered to be more reliable. This assumption is supported by the fact that KeyBank was able
to obtain a better price for the collateral than LCM would have obtained had KeyBank used the
method LCM proposed.
The Hartmanns have not submitted any evidence that would lead the Court to believe that
KeyBank did not dispose of the yachts in a commercially reasonable manner. In fact, since the
Because Mr. Hartmann purports to be “one of the industry’s leading salesman [sic] and authorities” on luxury
yachts, it would appear that using the method and manner of disposition that he proposed likely would be considered
“in conformity with reasonable commercial practices among dealers in” luxury yachts, thus satisfying the statutory
standard for commercially reasonable disposition. See ORC §1309.627(B)(3).
Court’s last ruling on summary judgment, KeyBank has conducted further discovery in which it
sent the Hartmanns several requests for admissions concerning this point. In response, Evonne
Hartmann has admitted that “LCM’s proposal was commercially reasonable with respect to the
market conditions at that time, the type of boats to be sold, and the anticipated recovery for
KeyBank.” [R. 51-2, Miller Cert., Exhs. H, J.] Randall Hartmann has failed to respond to
KeyBank’s request, [Id. at ¶¶ 12-13, 15, 17, Exhs. E, I] and his lack of response can be deemed
an admission under Federal Rule of Civil Procedure 36(b).6 Because LCM’s proposed method
for disposition was commercially reasonable, and because KeyBank has demonstrated that it
used the same method as LCM’s proposal but with different brokers, there is no genuine dispute
that KeyBank’s disposition of the yachts was commercially reasonable.
The secured party also is obligated “to use its best efforts to maximize the price for the
collateral and to have reasonable regard for the debtor’s interests.” Huntington Nat’l Bank, 559
N.E.2d at 459. Here, the only objection the Hartmanns raised about the disposition of the yachts
was that KeyBank did not utilize LCM’s proposal and allow LCM to broker the proposed sale. 7
KeyBank has explained, however, that it considered LCM to be “untrustworthy and unreliable”
“Matters admitted on the basis of a party failing to respond to a request for admission within the prescribed time
period are, for evidentiary purposes in that case, deemed conclusively established.” In re Ottawa River Steel, 324
B.R. 636, 638 (Bankr. N.D. Ohio 2005). The Court recognizes, however, that Fed. R. Civ. P. 36(b), and subsequent
caselaw interpreting it, authorize courts to allow a longer period of time for parties to answer requests in order to
prevent prejudice from deeming their failure to respond as an admission, and that courts may allow a party to
withdraw or amend such an admission when a party makes a motion to do so. Mr. Hartmann, however, has made no
such request to the Court in this case. See, e.g., Dupuis v. City of Hamtramck, 2008 WL 4615655, at *1 (E.D. Mich.
Oct. 16, 2008). Thus, absent any motion making a request to the contrary, the Court will deem Mr. Hartmann’s lack
of response an admission.
The Court again notes that this objection was raised in the Answer and in the Hartmanns’ response to the previous
summary judgment motion [R.17 at 4-5], but the Hartmanns and have not actually raised this objection, nor any
other, in response to the motion currently before the Court.
based on the prior out-of-trust sales, and KeyBank legitimately wanted to “maximize the price
for the collateral” as required. See id. The commercial reasonableness of KeyBank’s chosen
method and chosen brokers is even further supported by the fact that KeyBank obtained a
significantly higher price for the collateral than it would have had it used LCM’s proposal.
Although “price alone is not conclusively determinative of ‘commercial reasonableness,’” the
actual price obtained for the collateral “is relevant to a consideration of reasonableness.”
Columbus Mtge., Inc. v. Morton, 2007 WL 1748142, at *10 (Ohio Ct. App. June 19, 2007)
(granting summary judgment to secured party because no genuine issue of material fact existed
regarding commercial reasonableness where the secured party obtained a price for the collateral
that was the same or higher than the price that would have been obtained by using the method of
disposition preferred by the debtor). Here, as in Columbus Mortgage, the price that KeyBank
obtained “met or exceeded” the price that would have been obtained had the secured party
disposed of the collateral in the manner that LCM preferred. Id., at *11.
Thus, based on the facts presented, the Court finds that KeyBank disposed of the yachts
in a commercially reasonable manner by using a method of sale commonly used by the industry,
and by attempting to obtain the best price possible and avoid additional loss from LCM’s
dubious proposal. See, e.g. First Nat’l Bank of Cincinnati v. Cianelli, 73 Ohio App. 3d 781, 796
(1991) (finding “there was competent evidence to support” the conclusion that the sale of the
collateral was commercially reasonable because “[t]here was evidence showing that [the secured
party] acted in good faith in accordance with the terms of [the agreement] and that it actually
sought to avoid loss”). The Court further notes that the Hartmanns have not presented any
evidence to contradict this finding. As explained above, once the party moving for summary
judgment has satisfied its burden of showing “an absence of evidence to support the non-moving
party’s case,” Celotex, 477 U.S. at 325, the burden shifts to the non-moving party to come
forward with specific facts demonstrating the existence of a genuine dispute. Hall Holding, 285
F.3d at 424 (citing Celotex, 477 U.S. at 324). Clearly, since the Hartmanns have not responded
to KeyBank’s motion, they have not met their burden of proof. The Court therefore finds that no
genuine factual dispute remains concerning the debt owed by the Hartmanns to KeyBank.
The only remaining issue in this case is whether KeyBank is entitled to recover its
reasonable attorneys’ fees and costs. Ohio law generally does not permit the prevailing party in a
civil action to recover attorneys’ fees as part of the litigation costs. Wilborn v. Bank One Corp.,
906 N.E.2d 396, 400 (Ohio 2009). The exceptions to this rule, however, include when “a statute
or enforceable contract specifically provides for the losing party to pay the prevailing party’s
attorney fees.” Id.; see also Fabrication Grp., LLC v. Willowrick Partners, LLC, 2012 WL
4481309, at *7 (Ohio Ct. App. Sep. 28, 2012) (explaining that exceptions to the general rule
against fee-shifting include “(1) if there has been a finding of bad faith; (2) if a statute expressly
provides that the prevailing party may recover attorney fees; or (3) if the parties’ contract
provides for fee-shifting.”). In such cases, the court can enforce a contractual right to attorneys’
fees “so long as the fees awarded are fair, just, and reasonable”; and when the contract is not one
of adhesion in which “a party with little or no bargaining power has no realistic choice as to
terms.” Id. at 401 (internal citations omitted); see also Andersons, Inc. v. Lafarge N. Am., Inc.,
503 F. App’x 314, 322 (6th Cir. 2012) (quoting Wilborn, 906 N.E.2d at 400).
Here, both the contract at issue and the applicable statute provide for an award of
attorneys’ fees in this situation. As an initial matter, a contract should be construed as a whole,
and, if reasonable, courts should give effect to each provision of the contract. Foster Wheeler
Enviresponse, Inc. v, Franklin Cnty. Convention Facilities Auth., 678 N.E.2d 519, 526 (1997).
In doing so, the primary goal of contract interpretation is to determine and effectuate the intent of
the parties. Id. Ordinary words in the contract “will be given their ordinary meaning unless
manifest absurdity results,” or unless the contract as a whole clearly implies a different meaning.
Id. (quoting Alexander v. Buckeye Pipe Line Co. 374 N.E.2d 146 (1978)). When several
documents are “executed as part of the same transaction, [they] will be read as a whole, and the
intent of each part will be gathered from a consideration of the whole.” Id. (citations omitted).
In the contract at issue, the Floor Plan Agreement includes a provision in which LCM
clearly agreed to “reimburse [KeyBank] for all reasonable out-of-pocket expenses of every
nature including, but not limited to, reasonable attorneys’ fees, which [KeyBank] may incur in
connection with this Agreement, the Note and any Related Loan Documents or the collection of
the indebtedness created under such documents.” [R. 51-1, Ex. C at §4(g).] Similarly, the Floor
Plan Line of Credit Note provided that LCM is required to “promptly reimburse [KeyBank] for
all costs and expenses, including attorney’s fees, incurred by [KeyBank] in connection with . . .
any collection proceedings as a result of nonpayment of this Note.” [R. 51-1, Ex. E.]. Both of
these documents listed LCM as the “Debtor” and were signed by Randall Hartmann. Randall
and Evonne Hartmann each signed a Continuing Guaranty in which they “unconditionally and
absolutely guarant[eed] the punctual and full payment of all LCM’s debts and obligations to
KeyBank “when due, by acceleration or otherwise.” [R. 51-1, Exhs. A-B.]. Thus, the
agreements expressly provide that LCM owes KeyBank reasonable attorneys’ fees incurred in
the process of enforcing the loan obligations, and the Hartmanns expressly contracted with
KeyBank to pay all of LCM’s debts. The Hartmanns clearly signed as guarantors of LCM’s
loan, and they have not disputed their responsibility for all of LCM’s debts, including attorneys’
fees. There is also nothing in the contracts that would lead the Court to believe this interpretation
was absurd or was not the intent of the parties. See Foster Wheeler Enviresponse, Inc., 678
N.E.2d at 526.
Moreover, the Hartmanns were clearly not unsophisticated parties with “little or no
bargaining power” in the manner contemplated by the Wilborn court. 906 N.E.2d at 400; see
also Saad v. GE HFS Holdings, Inc., 366 F. App’x 593, 605 (6th Cir. 2010) (holding in a similar
case concerning a contractual provision for awarding attorneys’ fees in a debt collection suit that
“[b]ecause the parties were not of unequal bargaining power and Ohio law expressly allows for
attorneys’ fees, . . . the attorneys’ fees provisions at issue were not invalid as contrary to Ohio
Additionally, Ohio statute specifically provides for the enforceability of such contract
provisions in the context of security agreements, subject to certain requirements. See ORC §
1319.02. The Ohio Revised Code § 1319.02, formerly designated under R.C. § 1301.21, permits
the recovery of reasonable attorneys’ fees where “(1) the parties have entered into a contract of
indebtedness, (2) the contract of indebtedness includes a commitment to pay attorneys’ fees, 3)
the contract is enforced through judicial proceedings or otherwise after maturity of the debt, (4)
the total amount owed on the contract at the time such contract was entered into exceeds
$100,000, and (5) the obligation constitutes a reasonable amount.” Saad v. GE HFS Holdings,
Inc., 366 F. App’x 593, 605 (6th Cir. 2010) (quoting ORC § 1301.21(B)-(D))8; Columbus Truck
& Equip. Co. Inc. v. L.O.G. Transp., Inc., 2013 WL 3341175, at *2 (Ohio Ct. App. June 27,
2013) (quoting Saad, 366 F. App’x at 605). Here, there is no dispute that the parties entered into
a contract of indebtedness, that the loan agreements included a commitment to pay attorneys’
fees, nor that the total amount owed far exceeded $100,000. The contract has been enforced after
the debt’s maturity both through bankruptcy court, and now through this Court. Thus, the
agreement to pay attorneys’ fees should be enforced as long as it is reasonable.
When determining whether the commitment to pay attorneys’ fees is reasonable, “all
relevant factors shall be considered”; the amounts “are deemed reasonable” if “based upon a
specific percentage of the total principal, interest, and other charges owed,” or, if not based on a
specific percentage, “an amount equal to the attorneys’ fees customarily charged by the
attorney[/s] rendering the services.” ORC § 1319.02 (D). The court in Saad v. GE HFS
Holdings held that this statute places the burden on the indebted party to demonstrate that the
fees are not reasonable – if not based on a specific percentage, the debtor must show the fees are
in excess of those “customarily charged.” Saad, 366 F. App’x at 607. Because the debtors in
that case “failed to satisfy their evidentiary burden” of demonstrating the unreasonableness of the
fees, the Sixth Circuit affirmed the district court’s award of attorneys’ fees and costs. Id.
The Credit portion of the Ohio Revised Code explains that § 1301.21 was replaced in June 2011, with § 1319.02,
Here, the agreements provided for reimbursement of “reasonable” attorneys’ fees, and
KeyBank has only requested “its reasonable attorney’s fees and costs” in an amount to be
determined by separate application. [R. 51-3 at 23 (emphasis added).] At this stage, the Court
has not been presented with a specific amount of attorneys’ fees but has only been asked to
determine whether KeyBank may collect reasonable attorneys’ fees and costs associated with this
litigation. The Court finds from the above discussion that the law clearly permits recovery of
attorneys’ fees in debt collection suits such as this, and the Hartmanns have presented no
evidence to the contrary. At this point, the Hartmanns have the burden of demonstrating that the
requested fees are unreasonable, and, like the indebted party in Saad v. GE HFS Holdings, Inc.,
the Hartmanns have presented no evidence to dispute either the award or the amount of fees.
Indeed, as evidenced by the Hartmanns’ complete lack of response to KeyBank’s motion, they
have not disputed the issue at all. Accordingly, the Court finds that KeyBank is entitled to
recover its reasonable attorneys’ fees and costs, in an amount to be determined by further Order
upon submission of a fee application by KeyBank.
In conclusion, the Court finds that even when construing all reasonable inferences in
favor of the Hartmanns, KeyBank has met its burden of demonstrating an absence of any genuine
issue of material fact, and the burden has shifted to the Hartmanns to come forward with specific
facts showing that a genuine dispute exists. See Hall Holding, 285 F.3d at 424 (citing Celotex
Corp., 477 U.S. at 324). The Hartmanns, by their complete lack of response, have failed to meet
but the language remains the same. The cases that KeyBank relies upon in its motion for summary judgment quote
§ 1301.21, but since it is now the same as § 1319.02, the Court has cited to cases referring to both sections.
this burden. As it is required to do, the Court has determined that the law supports KeyBank’s
arguments, albeit while relying on KeyBank’s “unrebutted recitation of the evidence,” and the
evidence presented “supports a conclusion that there is no genuine issue of material fact.”
Guarino, 980 F.2d at 410. Thus, judgment should be entered in favor of KeyBank. Accordingly,
and the Court being otherwise sufficiently advised, it is HEREBY ORDERED as follows:
Plaintiff KeyBank’s Renewed Motion for Summary Judgment [R. 51] is
Summary Judgment is awarded in favor of KeyBank and against Randall and
Evonne Hartmann, jointly and severally, in the amount of $1,383,372.73, as of October 22, 2013,
plus per diem interest of $189.40 per diem from that date until entry of judgment;
Reasonable attorneys’ fees and costs shall be awarded to KeyBank in an amount
to be determined upon KeyBank’s submission of a separate fee application; and
All other matters being settled, the Final Pretrial Conference in this case that is
currently scheduled for March 3, 2014, and the Jury Trial scheduled for April 7, 2014, in
London, Kentucky are hereby CANCELLED.
The Court will enter an appropriate Judgment contemporaneously herewith.
This 18th day of February, 2014.
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