Cohen et al v. Lyle et al
MEMORANDUM OPINION by Senior Judge Thomas B. Russell on 2/6/2014 re 23 MOTION for Partial Summary Judgment filed by Jeffrey Cohen, Susan Cohen. For the foregoing reasons, the Plaintiffs' Motion for Partial Summary Judgment (Docket No. 23 ) is GRANTED. An appropriate order shall issue. cc: Counsel (CDR)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:12-CV-201
JEFFREY COHEN, TRUSTEE OF THE
BENJAMIN COHEN IRREVOCABLE TRUST OF 1994, and
JEFFREY COHEN, TRUSTEE OF THE
ABRAHAM COHEN IRREVOCABLE TRUST OF 1994
LYLE ENERGY PARTNERS, INC.,
LE BIOMASS PROJECT 1, and
LE PROJECT 2007-B, LLC
This matter is before the Court upon the Motion for Partial Summary Judgment of
Plaintiffs Jeffrey Cohen, in his individual capacity and as Trustee of the Benjamin Cohen
Irrevocable Trust of 1994 and the Abraham Cohen Irrevocable Trust of 1994, and Susan Cohen.
(Docket No. 23.) Defendants Shef Lyle, Lyle Energy Partners, Inc., and LE Biomass Project 1
and LE Project 2007-B, LLC have responded. (Docket No. 24.) Plaintiffs have replied. (Docket
No. 25.) This matter is now ripe for adjudication.
Plaintiffs are investors who seek to recover their losses associated with their purchase of
securities in LE Biomass Project 1 (“the Project”) and LE Project 2007-B, LLC. Plaintiffs assert
that they invested $100,000.00 in the Project, but later discovered that the capital was not used
for the benefit of the Project or its investors.1 Instead, they allege, the capital was used to pay the
indebtedness of an affiliated company, Lyle Energy and Development, Inc., contrary to the
Confidential Information Memorandum (“the Memorandum”). (Docket No. 23-1 at 2.)
The parties agree that Defendants repaid $40,000.00 on June 29, 2012 and $20,000 on
October 30, 2012, totaling $60,000. (Docket No. 23-1 at 2.) The Court now assesses the
appropriate method of calculating the appropriate rate of interest on the unpaid principal balance
of $40,000.00 owed to the Plaintiffs.
Plaintiffs ask the Court to find that Lyle Energy Partners, Inc. is indebted to them in
proportion to their investments in the Project; specifically, they seek a recovery of $84,092.75 as
of November 29, 2013, plus additional interest at the rate of 13.33% per annum from November
29, 2013 until the date of judgment, plus post-judgment interest. (Docket No. 23-6.) Defendants
suggest that the appropriate method would instead calculate interest at 8% or 10% per annum.
(Docket No. 24 at 2.)
Summary judgment is appropriate where the pleadings, the discovery and disclosure
materials on file, and any affidavits show “that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In determining
whether summary judgment is appropriate, a court must resolve all ambiguities and draw all
reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986).
Defendants assert that this $100,000.00 was a loan, rather than an investment. However, they
do not dispute that they defaulted upon this obligation, failing to repay the loan within the ninemonth period established in the Memorandum. (Docket No. 24 at 1-2.) The Court need not
address this issue in its consideration of the instant motion.
“[N]ot every issue of fact or conflicting inference presents a genuine issue of material
fact.” Street v. J.C. Bradford & Co., 886 F.2d 1472, 1477 (6th Cir. 1989). The test is whether
the party bearing the burden of proof has presented a jury question as to each element in the case.
Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir. 1996). The plaintiff must present more than a mere
scintilla of evidence in support of his position; rather, he must present evidence on which the
trier of fact could reasonably find for him. See id. (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986)). Mere speculation will not suffice to defeat a motion for summary
judgment: “[T]he mere existence of a colorable factual dispute will not defeat a properly
supported motion for summary judgment. A genuine dispute between the parties on an issue of
material fact must exist to render summary judgment inappropriate.” Monette v. Elec. Data Sys.
Corp., 90 F.3d 1173, 1177 (6th Cir. 1996) (abrogated on other grounds by Lewis v. Humboldt
Acquisition Corp., 681 F.3d 312 (6th Cir. 2012)). It is against this standard that the Court
reviews the following facts.
Although Ky. Rev. Stat. Ann. § 360.010 fixes the legal rate of interest at 8% per annum,
it further provides that “any party or parties may agree, in writing, for the payment of interest in
excess of that rate.” Ky. Rev. Stat. Ann. § 360.010 (1).
The Court finds that the parties agreed to an interest rate of 10% per nine-month period,
resulting in an annual interest rate of 13.33%. Here, the parties agreed to an interest rate above
the statutory amount. The Memorandum explains the loan terms as follows:
The loan term will be nine (9) months. The interest rate will be a
flat ten (10%) percent. (Example: 1 Unit in the amount of
$100,000 will earn $10,000 regardless if paid out prior to the nine
(9) months or paid out at the end of the (9) month term.)
(Docket No. 23-2 at 2.)
Therefore, on its face, the Memorandum states that the interest rate is 10% per nine
months. Annualizing the 10% for nine months yields an annual interest rate of 13.33% per
annum, resulting in $84,092.75 due as of November 29, 2013, with $84,092.75 plus additional
interest at the rate of $30.71 per day. The Court’s calculation reflects the plain language of the
Memorandum and resolves any ambiguity against the document’s author—that is, the
Defendants. In re Delta America Re Insurance Co., 900 F.2d 890, 892 (6th Cir. 1990) (“IN
interpreting disputed contract provisions, we generally start by attempting to discern the intent of
the parties. We also generally resolve ambiguities against the drafter.”)
Defendants contend that the Court may not order an interest rate exceeding 10% per
annum, but this argument overlooks that the Memorandum does not designate a rate of 10% per
annum; rather, the 10% rate applies to a nine-, not twelve-, month period. Moreover, the Court’s
analysis is not atypical: as Plaintiffs note, courts routinely annualize the interest rate of shortterm loans. See, e.g., Zahra v. Charles, 639 F.Supp. 1405 (S.D. Mich. 1986); Jordan River
Resrouces, Inc. v. Jay & P, LLC, 445 B.R. 657 (W.D. Mich. 2011).
Finally, equity and fairness demand that the interest rate be calculated at 13.33% per
annum. Because the Defendants’ method would diminish the applicable rate of interest upon
maturity and default, Defendants would essentially receive a windfall by defaulting upon their
For the foregoing reasons, the Plaintiffs’ Motion for Partial Summary Judgment (Docket
No. 23) is GRANTED. An appropriate order shall issue.
February 6, 2014
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