Ringdahl v. Afsharjavan

Filing 54

MEMORANDUM OPINION. Signed by Judge Paula Xinis on 10/22/2019. (cm 10/22/2019 - jf3s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
ROBERT RINGDAHL,

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Plaintiff,

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v.

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Civil Action No. 8:18-cv-01006-PX

ARTIN AFSHARJAVAN,

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Defendant.

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MEMORANDUM OPINION

Pending in this breach of contract action is Plaintiff Robert Ringdahl’s motion for
summary judgment (ECF No. 47). The motion is fully briefed, and no hearing is necessary. See
Loc. R. 105.6. For the following reasons, the Court grants Ringdahl’s motion as to liability, but
denies the motion as to damages. Ringdahl will be granted 14 days from the date of this Opinion
and accompanying Order to supplement the record as to damages and to submit a petition for
reasonable attorneys’ fees.
I.

Background

The following facts are undisputed. In June 2017, Ringdahl loaned $150,000 to Binary
Group, Inc. (“Binary Group”), a government contractor. ECF No. 50 ¶ 13; ECF No. 2 at 7; ECF
No. 12 at 7; ECF No. 47-3 ¶ 3. Defendant Artin Afsharjavan, a shareholder of Binary Group and
a member of its board of directors, personally guaranteed the loan as memorialized in a written
Guaranty Agreement. ECF No. 47-13; ECF No. 50 ¶ 5; ECF No. 47-10 at 4–7. Additionally,
Binary Group’s CEO, Kawaljit Singh, memorialized an identical Guaranty Agreement in
connection with the Ringdahl loan. ECF No. 47-10 at 13–16. Both Guaranty Agreements
provided that if Binary Group defaulted on repayment terms of the Ringdahl loan, Ringdahl
could seek satisfaction of the loan from Afsharjavan and Singh regardless of whether Ringdahl

pursued separate legal action against Binary Group. ECF No. 47-10 at 4–7, 13–16.
In addition to the Guaranty Agreements, Afsharjavan and Singh executed two separate
Stock Pledges, identical except for the number of shares pledged. Afsharjavan secured the loan
by pledging 450,000 shares of Binary Group stock to Ringdahl, whereas Singh pledged 40,500
shares. ECF No. 47-10 at 8–12, 17–22. Both Stock Pledges provided that the stock would be
released once the loan was paid in full. Id.
During this time, Binary Group experienced financial difficulties and failed to pay on the
Ringdahl loan. On November 20, 2017, Binary Group and Ringdahl modified the terms of the
loan by way of an allonge to the promissory note, which extended payments on the loan through
February 1, 2018 but did not otherwise change the terms of the Guaranty Agreements or Stock
Pledges. ECF No. 47-15. Binary Group, however, did not satisfy the amended loan agreement,
and on January 2, 2018, Ringdahl issued a notice of loan default on the company. ECF No. 4718. The outstanding loan balance owed to Ringdahl at that time was $128,750. ECF No. 47-18;
ECF No. 47-3 ¶¶ 23–25.
On January 11, 2018, the Binary Group Board scheduled an emergency Board meeting to
take place on January 22, 2018. ECF No. 50-13. The purpose of the meeting was to address the
financial health of the company and whether Singh should be ousted from the Board for having
taken money from the company. See ECF Nos. 50-13; 47-17. On the same day, Singh and
Ringdahl entered a separate agreement which released Singh from his personal guaranty on the
loan in exchange for transferring his 450,000 shares of Binary Group stock to Ringdahl. ECF
No. 50-12. Singh also agreed to allow Ringdahl a proxy vote for the 450,000 shares at upcoming
Board meetings until the shares were transferred. Id.
The Board meeting occurred as planned. On January 22, 2018, Singh was unanimously

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voted off the Board and Ringdahl was voted in as a Director, albeit over Afsharjavan’s objection.
ECF No. 50-13. The record is unclear as to whether Singh ever transferred the 450,000 shares to
Ringdahl, and if so, the fair market value of such shares at the time of transfer.1 Further,
although Ringdahl acknowledged in his deposition to having “settled” the matter with Singh, the
record sheds no additional light on the terms of this settlement and whether the settlement
satisfied some or all of the outstanding balance of the Ringdahl loan. ECF No. 50-5 at 3.
Initially, Ringdahl filed suit in the Circuit Court for Montgomery County, Maryland
alleging that Afsharjavan breached his obligations under the Guaranty Agreement and the Stock
Pledge by failing to pay the outstanding loan amounts. ECF No. 2. Afsharjavan, proceeding pro
se, removed the action to this Court. ECF No. 1. After a lengthy discovery period, Ringdahl
moved for summary judgment on both counts. ECF No. 47.
II.

Standard of Review

Summary judgment is appropriate when the court, viewing the evidence in the light most
favorable to the non-moving party, finds no genuine disputed issue of material fact, entitling the
movant to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). “A party opposing
a properly supported motion for summary judgment ‘may not rest upon the mere allegations or
denials of [his] pleadings,’ but rather must ‘set forth specific facts showing that there is a
genuine issue for trial.’” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522
(4th Cir. 2003) (quoting former Fed. R. Civ. P. 56(e)). “A mere scintilla of proof . . . will not
suffice to prevent summary judgment.” Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003).

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The record also reflects that Singh notified Ringdahl, through counsel, that Singh believed the January 11, 2018
agreement was void as procured under duress, ECF No. 50-14. However, Ringdahl testified that the “settlement”
with Singh had been “affirmed” in the summer of 2018. ECF No. 50-5 at 3.

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Importantly, “a court should not grant summary judgment ‘unless the entire record shows a right
to judgment with such clarity as to leave no room for controversy and establishes affirmatively
that the adverse party cannot prevail under any circumstances.’” Campbell v. Hewitt, Coleman
& Assocs., Inc., 21 F.3d 52, 55 (4th Cir. 1994) (quoting Phoenix Sav. & Loan, Inc. v. Aetna
Casualty & Sur. Co., 381 F.2d 245, 249 (4th Cir. 1967)). Where the party bearing the burden of
proving a claim or defense “fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the burden of proof at
trial,” summary judgment against that party is likewise warranted. Celotex, 477 U.S. at 322.
Although a pro se party is “given some latitude,” he may not avoid summary judgment by
“relying on bald assertions and speculative arguments.” Mansfield v. Kerry, No. DKC 15-3693,
2016 WL 7383873, at *2 (D. Md. Dec. 21, 2016) (citing Smith v. Vilsack, 832 F. Supp. 2d 573,
580 (D. Md. 2011)).
III.

Discussion

As a preliminary matter, the Court must determine which state law applies to the claims.
Federal courts sitting in diversity apply the conflict of laws rules of the forum state. See
Sokolowski v. Flanzer, 769 F.2d 975, 977 (4th Cir. 1985). Under Maryland law, if the contract
does not include a choice-of-law provision, the court applies “the law of the jurisdiction where
the contract was made.” Cunningham v. Feinberg, 441 Md. 310, 326 (2015). The Guaranty
Agreement plainly states that Maryland law applies. ECF No. 47-10 at 7. Although the Stock
Pledge does not include an express choice-of-law provision, the record reflects that it was
executed contemporaneously with the promissory note between Ringdahl and Binary Group,
which clearly demonstrates that the Stock Pledge was made in Maryland. ECF No. 2 ¶ 19; ECF
No. 47-10 at 2–3 (stating that the note “is secured . . . by a stock pledge agreement dated the date

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hereof” and that the note “is made in . . . the State of Maryland”). Moreover, neither party
disputes that Maryland law applies to both agreements. The Court, therefore, applies Maryland
law to the claims.
In Maryland, “to state a claim for breach of contract, a plaintiff need only allege the
existence of a contractual obligation owed by the defendant to the plaintiff, and a material breach
of that obligation by the defendant.” RRC Ne., LLC v. BAA Maryland, Inc., 413 Md. 638, 658
(2010). For each of the contracts in dispute, Afsharjavan has failed to generate a genuine issue
of disputed fact as to his having breached his contractual obligations. Each contract claim is
considered separately.
A. Breach of the Guaranty Agreement
It is undisputed that under the Guaranty Agreement, Afsharjavan promised to guaranty
repayment of the Ringdahl loan. ECF No. 47-10 at 4–7; ECF No. 47-13. It is also undisputed
that that Binary Group defaulted on the loan, ECF No. 47-18; ECF No. 47-3 ¶¶ 10–25, triggering
Afsharjavan’s obligation to satisfy the loan balance. Finally, it is undisputed that Afsharjavan
failed to pay Ringdahl. The unrebutted evidence, when viewed most favorably to Afsharjavan,
thus supports that Afsharjavan breached the Guaranty Agreement.
Afsharjavan contends, however, that summary judgment must be denied because his
repayment obligations were “secondary” as a surety. ECF No. 12 at 5.2 But this argument is
expressly contradicted by the plain and unambiguous terms of the agreement which states that
the “obligations and liabilities of the Guarantor . . . shall be primary, direct, and immediate.”
ECF No. 47-10 at 5. Even more fatal to the argument, no record evidence supports
Afsharjavan’s contention.

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Because Afsharjavan proceeds pro se, the Court considers his affirmative defenses as pleaded in his Answer even
if he did not address those defenses in his opposition to summary judgment.

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Afsharjavan next argues that summary judgment must be denied because Binary Group
maintains the financial wherewithal to satisfy the loan obligations. Accordingly, says
Afsharjavan, Binary Group’s solvency renders him somehow not legally obligated to pay the
outstanding amount. ECF No. 50 at 9. Again, this argument is unsupported in the record. The
record is clear that Binary Group did not honor its obligations under the loan. It is also clear that
under the Guaranty Agreement, Binary Group’s default allows Ringdahl to exercise his rights
under the Agreement without first making demands on Binary Group for satisfaction. ECF No.
47-10 ¶ 6. In this respect, Binary Group’s ability to pay is beside the point. The company’s
default triggered Ringdahl’s right to collect against Afsharjavan.
Last, Afsharjavan argues that the Guaranty Agreement is “void as unconscionable and
contrary to public policy.” ECF No. 12 at 5. Once again, Afsharjavan has generated no
evidence in support of this contention. An unconscionable contract is “characterized by extreme
unfairness, which is made evident by (1) one party’s lack of meaningful choice, and (2)
contractual terms that unreasonably favor the other party.” Walther v. Sovereign Bank, 386 Md.
412, 426 (2005) (citations and internal quotation marks omitted). Nothing in the record,
construed most favorably to Afsharjavan, demonstrates that he lacked meaningful choice to enter
into the agreement. See Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir.2013) (finding that to
survive summary judgment, the nonmoving party “cannot solely rely on mere allegations” but
“must set forth specific facts that go beyond the mere existence of a scintilla of evidence”)
(internal quotation marks omitted). The Guaranty Agreement’s terms are plain and Afsharjavan
is presumed to have read and understood that which he signed. See Walther, 386 Md. at 429
(“the law presumes that a person knows the contents of a document that he executes and
understands at least the literal meaning of its terms.”) (citation omitted). Nor has Afsharjavan

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generated any evidence that the loan terms were so one-sided to the point of unconscionability.
See id. at 431 (noting that courts “will not simply excise or ignore terms merely because, in the
given case, they may operate to the perceived detriment of the weaker party,”). Accordingly,
because the Guaranty Agreement plainly obligated Afsharjavan to pay Ringdahl if Binary Group
defaulted on its loan, and Afsharjavan refused to pay, summary judgment must be granted in
favor of Ringdahl on the breach of the Guaranty Agreement claim.
B. Breach of the Stock Pledge
Afsharjavan also pledged 450,000 shares of Binary Group stock as further security for the
loan. ECF No. 12 ¶ 13; ECF No. 47-10 at 8–12; ECF No. 47-13. The Stock Pledge provides
that “after any default by [Binary Group] in the payment of the Loan, [Ringdahl], at [his] option
. . . with or without bringing any action . . . may foreclose on the Stock.” Further, Ringdahl’s
“exercise of any of [his] remedies . . . shall not cure or waive any default . . . under the . . . other
agreements.” ECF No. 47-10 at 9.
Afsharjavan offers no argument challenging the validity of the Stock Pledge. Rather,
Afsharjavan argues that this obligation was extinguished when Singh agreed to tender 450,000
shares of Binary Group stock. ECF No. 50 ¶ 34. However, the January 11, 2018 agreement
between Singh and Ringdahl unambiguously released only Singh of “all personal responsibility
for the loan to Binary Group.” ECF No. 50-12. This agreement cannot be read to extinguish
Afsharjavan’s obligations. In fact, both Singh and Afsharjavan’s Guaranty Agreements
expressly provide that releasing one guarantor “shall in no way release or discharge” any other
guarantor “from liability hereunder, in whole or in part.” ECF No. 47-10 at 4, 13. Accordingly,
although Singh’s settlement with Ringdahl may offset the total amount that Afsharjavan owes,3

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A creditor cannot collect a total of more than 100% of its claim in the aggregate from all contributing parties. See,
e.g., Nuveen Mun. Trust v. Withumsmith Brown, P.C., 692 F.3d 283, 295 (3d Cir. 2012) (“a creditor cannot collect

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Ringdahl’s settlement with Singh does not extinguish Afsharjavan’s obligations to Ringdahl.
C. Damages
Ringdahl seeks from Afsharjavan the outstanding loan balance plus attorneys’ fees.
Under Maryland law, the non-breaching party is entitled to compensatory damages that are a
natural and proximate consequence of the breach, or which are reasonably within the parties’
contemplation at the time of the contract. Munday v. Waste Mgmt. of N. Am., Inc., 997 F. Supp.
681, 685 (D. Md. 1998) (citing Stone v. Chicago Title Ins. Co., 330 Md. 329, 342 (1993)). “The
measure of such damages is the sum which would place the injured party in the same position as
if the contract had been performed.” Id. (citing Beard v. S/E Joint Venture, 321 Md. 126
(1990)).
Although Ringdahl appropriately seeks as damages the balance of the outstanding loan
amount, the record evidence viewed most favorably to Afsharjavan renders the exact figure
difficult to ascertain. The record reflects that Ringdahl “settled” his claims with Singh in
connection with the same loan although the exact terms of the settlement are not clear. ECF
Nos. 50-12; 50-5 at 3. Further, the record reflects that Ringdahl may have received 450,000 of
Singh’s shares of Binary Group stock to release Singh from his obligations, although, again, the
record is not clear as to whether Ringdahl in fact received the shares, and if so, their fair market
value. Id. Ringdahl recognizes the he may recover no more than the outstanding loan balance.
Compare ECF 47-2 at 15 with Gen. Tel. Co. of the Nw., Inc. v. Equal Employment Opportunity
Comm’n, 446 U.S. 318, 333 (1980) (“It also goes without saying that the courts can and should
preclude double recovery by an individual.”) and Nuveen Mun. Trust, 692 F.3d at 295 (“a

more, in total, than the amount it is owed.”) (citing Ivanhoe Building & Loan Ass'n of Newark, N.J. v. Orr, 295 U.S.
243, 246 (1935)).

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creditor cannot collect more, in total, than the amount it is owed.”) (citing Ivanhoe, 295 U.S. at
246). Accordingly, the Court must ascertain the sums that Ringdahl has already received in
connection with the loan to Binary Group. The record in this respect compels denial of summary
judgment as to damages.
Ringdahl also requests that this Court order Afsharjavan to tender the Binary Group stock
by enforcing the terms of the Stock Pledge. A party seeking specific performance must “be able
to show that he has fully, not partially, performed everything required to be done on his part.”
Cattail Assocs., Inc. v. Sass, 170 Md. App. 474, 499 (2006) (quoting Clayten v. Proutt, 227 Md.
198, 203 (1961)). Whether specific performance is warranted rests with the sound discretion of
the court. Hupp v. Geo. R. Rembold Bldg. Co., 279 Md. 597, 600 (1977). Specific performance
is typically granted “when money damages are inadequate, such as when the plaintiff cannot
secure a comparable substitute performance by means of money awarded as damages.” 8621
Ltd. P’ship v. LDG, Inc., 169 Md. App. 214, 239 (2006). However, “[i]f a contract is fair,
reasonable and certain, specific performance may be granted almost as a matter of course.”
Steele v. Goettee, 313 Md. 11, 23 (1988) (citing of Hupp, 279 Md. at 601 (1977)).
The Stock Pledge plainly provides that if Binary Group defaulted on the loan, which it
did, the 450,000 shares that Afsharjavan pledged would be forfeited to Ringdahl. ECF No. 4710 at 8–10. However, because the amounts owed to Ringdahl remain uncertain, the Court cannot
yet conclude that specific performance is warranted.
The Court recognizes that although it cannot grant summary judgment as to damages at
this juncture, it also may be premature to set in a damages-only trial. Although Afsharjavan has
not formally sought contribution from Singh, or asserted the affirmative defense of offset, he is
proceeding pro se. Construing Afsharjavan’s arguments broadly, as it must, the Court finds that

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he has squarely contended Singh’s settlement affects the amounts owed to Ringdahl.
Consequently, the Court directs that within 14 days from the date of this Opinion and
Order, Ringdahl must supplement the record with evidence regarding any amounts he received in
connection with the Singh settlement as to the Binary Group loan. Ringdahl also must
supplement the record as to whether he received Binary Group stock from Singh to release
Singh’s obligations under the Guaranty Agreement and Stock Pledge, and if so, the value of the
stock at the time of receipt. Finally, Ringdahl shall submit evidence of the current fair market
value of Afsharjavan’s stock that was pledged. Afsharjavan shall be granted fourteen days to
respond. Both parties may submit letter pleadings not to exceed five pages on the question of
damages related to the supplemental record evidence. A reply is not permitted unless requested
by the Court. The Court will then determine whether trial is necessary as to the outstanding
amounts owed to Ringdahl in connection with Afsharjavan’s breach of the Guaranty Agreement
and Stock Pledge.
D.

Attorneys’ Fees

As to attorneys’ fees, both the Guaranty Agreement and the Stock Pledge plainly provide
for attorneys’ fees to Ringdahl. The Guaranty Agreement expressly states that the guarantor
(Afsharjavan) agrees to pay “all attorneys' fees incurred by [Ringdahl] for the filing of any action
to enforce this Guaranty and in the event of such an action . . . all attorney's fees incurred by the
[Ringdahl] in connection with such action.” ECF No. 47-10 at 5. The Stock Pledge similarly
compels the non-prevailing party to pay the prevailing party’s “reasonable attorneys’ fees and
costs.” ECF No. 47-10 at 10. Accordingly, within fourteen days from the date of this Opinion
and accompanying Order, Ringdahl shall submit a petition for reasonable attorneys’ fees.
Ringdahl is advised to consult this Court’s Local Rule 109 and Appendix B for guidance.

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Afsharjavan shall be granted fourteen days to respond to the fee petition. Both parties are
directed to submit their pleadings in letter format not to exceed five pages exclusive of exhibits.
A reply is not permitted unless requested by the Court.
IV.

Conclusion

For the foregoing reasons, Plaintiff Robert Ringdahl’s motion for summary judgment is
GRANTED as to liability and DENIED as to damages. A separate order follows.

10/22/2019

/S/
Paula Xinis
United States District Judge

Date

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