First NBC Bank v. Kirsch
Filing
44
ORDER AND REASONS GRANTING 38 Motion for Summary Judgment. FURTHER ORDERED that the plaintiff shall submit a proposed judgment within seven days. Signed by Judge Martin L.C. Feldman on 10/17/18. (clc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
FIRST NBC BANK
CIVIL ACTION
v.
NO. 16-04352
FRED KIRSCH
SECTION "F"
ORDER AND REASONS
Before
judgment.
the
Court
is
the
plaintiff’s
motion
for
summary
For the reasons that follow, the motion is GRANTED.
Background
On
September
24,
2013,
Monmouth
Holding,
Inc.
and
King
Hospitality, Inc. borrowed $2,500,000.00 from First NBC Bank, as
evidenced by a promissory note, repayment of which is secured by
a multiple indebtedness mortgage on certain immovable property and
a commercial security agreement on certain movable property; and
Fred
Kirsch,
the
defendant,
as
guarantor
of
the
commercial
guarantee, unconditionally guaranteed repayment of all obligations
1
and liabilities owed by borrowers to First NBC Bank, whether then
existing or later arising. 1
On October 30, 2013, the borrowers executed a Change in Terms
Agreement that added a “Debt Service Coverage Ratio Covenant;” the
Note’s
repayment
obligations
were
unchanged.
The
borrowers
defaulted under the terms of the Note when they stopped making
scheduled payments in November 2015.
As a result, according to
the Note’s terms, the entire unpaid principal balance, together
with all accrued interest and all other sums payable, became
immediately due and payable.
Pursuant to its rights under the
multiple indebtedness mortgage and commercial security agreement,
First NBC Bank seized and sold certain property of the borrowers.
Due to the seizure and sale of the collateral, the borrowers
received a credit of $1,609.128.94 on May 25, 2016.
According to
the record, the amount due and owing under the Note, Multiple
These facts are drawn from the summary judgment record, which
includes the Note and related agreements, a declaration by Ralph
N. Menetre, III, the Executive Vice President for First NBC Bank,
and a declaration by Robert Holmes, Account Manager for Republic
Credit One, L.P. In compliance with Local Rule 56.1, the plaintiff
included with its motion for summary judgment a concise Statement
of Uncontested Facts. This Court’s Local Rules mandate that the
party opposing summary judgment “must include a separate and
concise statement of the material facts which the opponent contends
present a genuine issue.”
See Local Rule 56.2.
Here, the
defendant failed to file any such statement to controvert the
plaintiff’s submission and, therefore, “[a]ll material facts in
the moving party’s statement will be deemed admitted, for purposes
of the motion.” See id.
2
1
Indebtedness Mortgage, and Security Agreement as of May 31, 2016
is $932,695.00 principal; $19,428.22 in accrued interest as of
July 1, 2016 at a rate of 6.5% from July 1, 2016 until paid;
additional
advances
(including
$31,933.15
in
property
taxes;
$30,155.22 in forced insurance; $40,248.75 in security to sale;
and $7,006.78 in locks and repairs); $2,233.58 in interest on
additional advances; $500 in late fees; $11,163.77 in costs; and
$10,935.50 in attorney’s fees (through 5/31/16), for a total of
$1,086,299.97.
On May 6, 2016, First NBC Bank filed this lawsuit against
Fred Kirsch to recover the sums owed under the terms of the Note,
after applying all credits the borrowers are entitled to by law.
After First NBC Bank was closed and the Federal Deposit Insurance
Corporation, as Receiver, was substituted for First NBC Bank, FDICR assigned and transferred the Note and claims sued upon to
Republic
Credit
One,
L.P.,
which
is
now
the
holder
and
the
that
the
plaintiff. 2
In
answering
the
lawsuit,
Kirsch
has
admitted
borrowers executed the Note, that the borrowers were in default
On June 14, 2018, the Court granted Republic Credit One, L.P.’s
motion to substitute itself as plaintiff in place of Dyck O’Neal,
Inc., which was originally substituted in place of FDIC-R on March
5, 2018. According to the Corrected Assignment and Bill of Sale,
the FDIC assigned its rights in the Monmouth Holding account (among
others) to Republic Credit One, L.P on May 24, 2017.
3
2
under the terms of the Note, that he executed the Commercial
Guaranty dated September 24, 2013, under which he unconditionally
guaranteed repayment of all indebtedness owed by the borrowers to
the holder.
seeking
In August 2016, First NBC moved for summary judgment,
principal,
interest
on
principal,
additional
advances
(property taxes, forced insurance, security to sale, locks and
repairs), interest on advances, late fees, costs, and attorney’s
fees for a total of $1,086,299.97.
On February 17, 2017, another
Section of this Court denied the motion without prejudice.
denying, the following shortcomings were identified:
In so
the legal
issue was insufficiently briefed and the “[p]laintiff’s submission
lacks supporting documentation for its claims for ‘Additional
Advances,’ ‘Costs,’ and ‘Attorneys Fees.’”
More than a year after
summary judgment was denied, Dyck O’Neal, Inc. was substituted in
place of FDIC-R as the plaintiff.
A few months later, Dyck O’Neal,
Inc. moved for summary judgment.
The case was then reassigned to
this Section of Court.
The defendant filed an opposition to Dyck
O’Neal, Inc.’s motion for summary judgment, and Dyck O’Neal, Inc.
filed a reply.
Shortly after Dyck O’Neal, Inc. filed its reply
papers, Republic Credit One, L.P. moved to be substituted in this
litigation as the plaintiff.
The request was granted, and the
motion for summary judgment was denied without prejudice.
4
The Court now considers the motion for summary relief in which
the plaintiff, Republic Credit One, L.P., submits that it is
entitled to $932,695.00 principal; $19,428.22 in accrued interest
as of July 1, 2016 at a rate of 6.5% from July 1, 2016 until paid,
and Court costs. 3
I.
Federal Rule of Civil Procedure 56 instructs that summary
judgment is proper if the record discloses no genuine dispute as
to any material fact such that the moving party is entitled to
judgment as a matter of law.
No genuine dispute of fact exists if
the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party. See Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
A genuine
dispute of fact exists only "if the evidence is such that a
reasonable jury could return a verdict for the non-moving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The mere argued existence of a factual dispute does not defeat
an otherwise properly supported motion.
See id.
In this regard,
the non-moving party must do more than simply deny the allegations
For the purposes of its motion for summary judgment, the plaintiff
waives its right to attorney’s fees, other expenses, late fees,
and the default rate of interest.
5
3
raised by the moving party.
See Donaghey v. Ocean Drilling &
Exploration Co., 974 F.2d 646, 649 (5th Cir. 1992).
Rather, he
must come forward with competent evidence, such as affidavits or
depositions, to buttress his claims.
Id.
Hearsay evidence and
unsworn documents that cannot be presented in a form that would be
admissible
in
evidence
opposing evidence.
at
trial
do
not
qualify
as
competent
Martin v. John W. Stone Oil Distrib., Inc.,
819 F.2d 547, 549 (5th Cir. 1987); Fed. R. Civ. P. 56(c)(2).
"[T]he
nonmoving
conclusory
party
allegations,
scintilla of evidence."
cannot
defeat
unsubstantiated
summary
judgment
assertions,
or
with
only
a
Hathaway v. Bazany, 507 F.3d 312, 319
(5th Cir. 2007)(internal quotation marks and citation omitted).
Ultimately, "[i]f the evidence is merely colorable . . . or is not
significantly
probative,"
summary
judgment
is
appropriate.
Anderson, 477 U.S. at 249 (citations omitted); King v. Dogan, 31
F.3d 344, 346 (5th Cir. 1994) (“Unauthenticated documents are
improper as summary judgment evidence.”).
Summary judgment is also proper if the party opposing the
motion fails to establish an essential element of his case.
See
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In deciding
whether a fact issue exists, courts must view the facts and draw
reasonable inferences in the light most favorable to the nonmoving party.
Scott v. Harris, 550 U.S. 372, 378 (2007).
6
Although
the Court must "resolve factual controversies in favor of the
nonmoving party," it must do so "only where there is an actual
controversy, that is, when both parties have submitted evidence of
contradictory facts."
Antoine v. First Student, Inc., 713 F.3d
824, 830 (5th Cir. 2013)(internal quotation marks and citation
omitted).
II.
For the purposes of its motion for summary judgment, the
plaintiff limits its claims, seeking judgment as a matter of law
only as to $932,695.00 in principal, $19,428.22 in accrued interest
as of July 1, 2016, interest thereafter at the initial rate of
interest provided in the promissory note of 6.5% per annum, and
court costs incurred in this proceeding.
Thus, notably, for the
purposes of summary judgment only, the plaintiff expressly waives
its right to attorney’s fees, other expenses, late fees, and the
default rate of interest.
Under Louisiana law, “a plaintiff establishes a prima facie
case to enforce a promissory note when he 1) produces and presents
the note into evidence; 2) shows it was signed by the defendant;
3) [shows] that the defendant has defaulted; and 4) as to an
assignee, present[s] evidence of a chain of assignments.” National
7
Collegiate Student Loan Trust 2003-1 v. Thomas, 129 So. 3d 1231,
1233-34 (La. App. 2 Cir. 11/20/13); see also La.R.S. 10:3-301. If
the plaintiff establishes its prima facie case, the burden shifts
to the defendant to submit evidence establishing a triable issue
of fact on a bona fide defense.
Thomas v. Bryant, 597 So. 2d 1065,
1068 (La.App. 2d Cir. 1992).
The plaintiff has established a prima facie case to enforce
the promissory note under Louisiana law.
the
summary
judgment
as
to
the
There is no dispute in
requisite
elements;
indeed,
independent of the other evidence submitted by the plaintiff, the
defendant has admitted that the borrowers executed the Note, that
the borrowers were in default under the terms of the Note, that he
executed the commercial guaranty dated September 24, 2013, under
which he unconditionally guaranteed repayment of all indebtedness
owed by the borrowers to the holder.
The defendant, pro se, has
failed to submit any evidence demonstrating the existence of a
triable issue of fact as to the plaintiff’s entitlement to the
outstanding
principal,
accrued
interest
on
principal,
or
entitlement to court costs. 4
Notably, in his opposition papers, the defendant continues to
challenge only those aspects of expenses or fees that the plaintiff
has waived for the purposes of summary judgment. The defendant
offers no evidence to refute the plaintiff’s entitlement to the
principal, interest on principal, or court costs. Finally, insofar
as the defendant characterizes the seizure and sale of the property
8
4
Considering the terms of the Note and the totality of the
summary
judgment
record,
the
Court
finds
that
the
borrowers
defaulted in failing to make scheduled payments since November
2015.
Under the terms of the Note, together with the other
documents
including
the
Commercial
Guarantee
signed
by
the
defendant, the defendant is personally liable for all sums due
under the Note.
Accordingly, the plaintiff’s motion for summary
judgment is GRANTED; the plaintiff is entitled to judgment as a
matter of law against Fred Kirsch, in solido, for $932,695.00
principal, $19,428.22 in accrued interest as of July 1, 2016 at a
rate of 6.5% from July 1, 2016 until paid, and the court costs
incurred in these proceedings. Because the plaintiff in its motion
has waived any right to attorney’s fees, other expenses including
security costs, property taxes, forced placed insurance, late
fees, and the default rate of interest, any claims for these
categories of costs and expenses are hereby dismissed.
IT IS
as “not an arm’s length transaction,” he offers neither legal
grounds nor evidence that undermine the plaintiff’s claim under
the Note and related documents or otherwise support the defendant’s
request for “further investigation.” (That the property was seized
and sold for less than its value, standing alone, would be neither
a defense to enforcement of a Note, nor grounds for a credit. See
Capital One, N.A. v. Nicoll, 113 So.3d 1158, 1162 (La.App. 5 Cir.
3/27/13)(citing Michael H. Rubin & Jamie D. Seymour, Deficiency
Judgments: A Louisiana Overview, 69 La. L. Rev. 783, 810 (2009)).
When no triable issues have been identified, summary judgment is
proper.
9
FURTHER
ORDERED:
that
the
plaintiff
shall
submit
a
proposed
judgment within seven days.
New Orleans, Louisiana, October 17, 2018
_____________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
10
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