Magnolia Financial Group LLC v. Antos et al
Filing
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ORDER AND REASONS granting in part and denying in part 6 Motion for Partial Summary Judgment; denying as moot 13 Motion to Strike Exhibit. Signed by Judge Jane Triche Milazzo. (ecm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MAGNOLIA FINANCIAL GROUP
CIVIL ACTION
VERSUS
NO: 15-7144
KENNETH ANTOS, ET AL
SECTION “H”
ORDER AND REASONS
Before the Court are Plaintiff’s Motion for Summary Judgment (Doc. 6)
and Defendant’s Motion to Strike Exhibit Submitted with Supplemental
Memorandum or Alternatively Motion to Continue Motion for Partial
Summary Judgement (Doc. 13). For the following reasons the Motion for
Summary Judgment (Doc. 6) is DENIED IN PART and GRANTED IN PART
and the Motion to Strike (Doc. 13) is DENIED AS MOOT.
BACKGROUND
This is a declaratory judgment action on a promissory note removed from
the 29th Judicial District Court for the Parish of St. Charles. On November
11, 2013, Defendants KCI Investments, LLC (“KCI”), Kenneth Antos, and
David Becklean executed a Secured Promissory Note (the “Note”) with Plaintiff
Magnolia Financial Group, LLC, (“Magnolia”) for the principal sum of
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$2,000,000 with an interest rate of 15% per annum. Defendant Becklean also
executed a Pledge and Security Agreement (the “Security Agreement”) in favor
of Magnolia, wherein he pledged his interest in the proceeds of a Settlement
Agreement dated September 22, 2012 among Twin Towers Trading Site
Management, LLC, Jeffrey Brandon, Eric Scholer, Becklean, and SMG Group
(the “Settlement Agreement”). This Pledge was recorded. Subsequently, on
January 13, 2015, Defendants entered into a second agreement to borrow an
additional $100,000 from Magnolia (the “Second Note”). Plaintiff contends
that no principal payments were paid on the Notes by the maturity date and
contends that $2,457,805.60 of principal and interest remains due and owing
on the Notes. Plaintiff filed the instant suit seeking a declaratory judgment
recognizing its rights under the Note and the Security Agreement.
Plaintiff filed the instant Motion for Partial Summary Judgment,
seeking a judgment (1) defining the undisputed amount owed on the
promissory note, (2) recognizing its appointment as attorney-in-fact for
purposes of carrying out the pledge, and (3) establishing its right to collect
attorney fees at the termination of the litigation. Defendants oppose this
Motion, arguing that it is precluded by genuine issues of material fact. They
have also responded with a Motion to Strike or in the Alternative to Continue,
arguing that a supplemental expert report submitted with Plaintiffs’ Reply
Brief is improperly before the Court.
LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue as to any material fact and that the
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moving party is entitled to a judgment as a matter of law.”1 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.”2
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor.3 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.”4 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.”5 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial.”6 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the
necessary facts.”7
Additionally, “[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion.”8
Fed. R. Civ. P. 56(c) (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
3 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997).
4 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
5 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
6 John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
7 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
8 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
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LAW AND ANALYSIS
Plaintiff’s Motion seeks a judgment (1) defining the undisputed amount
owed on the promissory note (2) recognizing its appointment as attorney-infact for purposes of carrying out the pledge agreement, and (3) establishing its
right to collect attorney fees at the termination of the litigation. The Court will
address each of these issues in turn.
I. Undisputed Amount Owed on the Note
Plaintiff contends that $2,457,805.60 remains due and owing on the
Note. Defendants dispute this amount, arguing that the transfer of a 9%
equity share of KCI investments to Plaintiff was made in partial satisfaction
of the Note (the “KCI Transfer”). For the purposes of this Motion, Plaintiff’s
purport to accept Defendants’ defenses as true in an effort to arrive at an
undisputed amount due and owing on the Notes; however, it presents different
undisputed amounts in its Motion and reply brief. In the original Motion,
Plaintiff contends that the undisputed amount is properly fixed at
$1,472,067.60, as identified by their expert witness, Dr. Shael Wolfson.
Following Defendants’ opposition, Plaintiff’s expert issued a supplemental
report revising his estimate of the undisputed amount downward to $965,141.
Defendants responded with a Motion to Strike Plaintiff’s revised expert report
as improperly before the Court.
Even assuming that Plaintiff’s revised report is properly before it, the
Court finds that it only serves to highlight the difficulty in setting an
undisputed amount due and owing on the notes at this early stage in the
litigation. Though Plaintiff is correct in its assertion that there does not
appear to be a dispute as to the fact that there remains outstanding some
amount due on the Notes, the precise amount remains very much in dispute.
The Court is unable to fix the undisputed amount of the debt on the record
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before it. Defendants are entitled to conduct their own discovery and retain
their own expert in an effort to ascertain the amount due. There are clear
disputes of material fact regarding, inter alia, the amount of credit due, if any,
for the KCI Transfer, the amount of payments previously made on the Notes,
and the amount of interest owed on the Notes. Accordingly, Plaintiffs request
for summary judgment on the undisputed amount of the note is denied as
premature. This Motion may be re-urged after discovery has taken place.
Because the Court finds this Motion should be denied as premature,
Defendants’ Motion to Strike is denied as moot.
II. Recognizing Plaintiff’s Appointment as Attorney-in-fact
Plaintiff next asks the Court to enter an order recognizing it as attorneyin-fact for Defendants with regard to the secured collateral. Section 12 of the
Security Agreement states, in pertinent part, as follows:
12. Attorney in Fact. Lender is hereby appointed, which
appointment as attorney-in-fact is irrevocable and coupled with an
interest, the attorney-in-fact of Pledgor for the purposes of
carrying out the provisions of this Agreement and taking any
action and executing any instruments which Pledgor fails to do the
following notice by Lender, and which Lender may deem
reasonably necessary or advisable to accomplish the purposes
hereof including, without limitation:
(c) to file any claims or take any action or institute any proceedings
that the attorney-in-fact may deem necessary or desirable for the
perfection and/or collection of any of the Collateral or otherwise to
enforce the rights of Lender, with respect to any of the Collateral.
Plaintiff avers that such an order is necessary to allow it to execute on the
collateral. Defendants respond, arguing that Plaintiff’s requested relief is
prohibited by La. Rev. Stat. § 10:9-609. This statute provides the situations in
which a secured creditor may take possession of collateral:
(a) Possession. After default, a secured party may take possession
of the collateral only:
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(1) after the debtor's abandonment, or the debtor's surrender to the
secured party, of the collateral;
(2) with the debtor's consent given after or in contemplation of
default;
(3) pursuant to judicial process; or
(4) in those cases expressly provided by law other than this
Chapter.9
Defendants argue that this statue precludes the relief requested by Plaintiff,
as “[a] debtor may not grant consent to self-help in general anticipation of the
possibility that a default will occur.”10
This argument is, however,
unpersuasive. Plaintiff is not asking this Court to order him into possession of
the collateral; rather, he seeks a declaration that the attorney-in-fact
provisions of Security Agreement are valid and enforceable. Defendant has
cited the Court to no law indicating that La. Rev .Stat. § 10:9-609 renders such
agreements per se unenforceable, and the Court’s own research has revealed
no such prohibition. Accordingly, summary judgment is granted recognizing
Plaintiff as attorney-in-fact for the purposes outlined in the Security
Agreement.
III. Attorneys’ Fees
Plaintiff finally requests an order recognizing its right to seek an award
of attorney fees and expenses incurred in the collection of the Notes. It avers
that such an award is authorized per the terms of the Notes, which provide
that Defendants shall pay “all reasonable attorneys’ fees and costs incurred in
enforcing and collecting under this Note.”11 Defendants have not filed an
opposition to this portion of Plaintiff’s Motion. Accordingly, the Court finds
that, should this matter proceed to judgment, Plaintiff would be entitled to
La. Rev. Stat. § 10:9-609.
Id. (Official Revision Comments).
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attorneys’ fees pursuant to the plain language of the Notes. Plaintiff’s Motion
is granted in this respect.
CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Partial Summary
Judgment (Doc. 6) is DENIED IN PART and GRANTED IN PART as
outlined above. Defendant’s Motion to Strike (Doc. 13) is DENIED AS MOOT.
New Orleans, Louisiana this 21st day of July, 2016.
____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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