Philips Medical Capital, LLC v. P & L Contracting, Inc. et al
Filing
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MEMORANDUM OPINION re 75 Judgment. Signed by U.S. Magistrate Judge David A. Sanders on 3/13/12. (def)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
DELTA DIVISION
PHILIPS MEDICAL CAPITAL, LLC
V.
PLAINTIFF
CIVIL ACTION NO. 2:10CV092-DAS
P&L CONTRACTING, INC. d/b/a
PREFERRED IMAGINING, LLC; JOHN
PARK; ANTHONY LEWIS
DEFENDANTS
MEMORANDUM OPINION AND ORDER
This matter is before the court on the plaintiff’s Renewed Motion for Summary Judgment
(# 57). After considering the motion and the response thereto, the court finds as follows:
I. FACTUAL BACKGROUND
This is a breach of contract action brought by the Plaintiff, Philips Medical Capital, LLC
(“Philips”), against the Defendants, P&L Contracting, Inc. d/b/a Preferred Imagining, LLC
(“P&L”); John Park; and Anthony Lewis. On November 8, 2006, Philips and P&L entered into
a Master Lease Agreement and Master Lease Schedule for a Philips Intera Pulsar Mobile 4
Channel 1.5T MR w/Customer Care and 48’ Calutech Mobile Solutions Mobile Unit.
Defendants John Park and Anthony Lewis executed continuing Guarantees in favor of Philips,
promising punctual payment and performance of any and all of the obligations of P&L to
Philips. Pursuant to the Master Lease Schedule, P&L was to make three monthly payments at
$0.00 followed by nine monthly payments at $25,437.44 plus applicable taxes followed by fortyeight equal consecutive payments in the amount of $36,156.27 plus applicable taxes.
The parties subsequently executed an Addendum to the Master Lease Schedule, dated the
same day as the Master Lease Agreement and Master Lease Schedule. This Addendum removed
the three-month deferral period and increased the amount financed because it included the costs
of a portion of the mobile interim unit provided by DMS Imagining, Inc. Anthony Lewis –
Chief Executive Officer and Vice President of P&L – executed the Addendum and was
authorized to do so pursuant to the Certificate of Secretary signed by Defendants Park and Lewis
on November 8, 2006. On March 29, 2007 and again on April 4, 2007, Philips notified P&L of
changes in the payment schedule. According to Philips, the revisions were made in accordance
with Section 5(b) of the Master Lease Schedule to reflect changes in similar term United States
Treasury Notes. The payment change notification on April 4, 2007, required P&L to make one
payment of $25,437.44 plus applicable taxes followed by forty-eight consecutive monthly
payments of $35,929.13 (including service) plus applicable taxes. The Philips Pulsar was
delivered to P&L’s offices on or about April 4, 2007.
In June 2009, P&L began falling behind on its payment obligations to Philips and by
December 2009, failed to make payments at all. On March 18, 2010, P&L informed Philips that
it would be terminating the Master Lease Agreement and surrendering the Philips Pulsar to
Philips. On April 10, 2010, Philips sent a final invoice to P&L, which included amounts for past
due payments, service fees, and late fees, for a total amount of $298,243.26. Philips then
retrieved the Philips Pulsar and sold it for $280,000, incurring expenses for storage and
maintenance in the amount of $17,069.64. The net proceeds from the sale of the Philips Pulsar
was $262,930.36. According to Philips, the Booked Residual Value (BRV) of the Philips Pulsar
at the time of sale was $240,900. In April 2010, Philips exercised its option to accelerate the
remaining balance pursuant to Paragraph 14(a) of the Master Lease Agreement.
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II. SUMMARY JUDGMENT STANDARD
Summary judgment is warranted under Rule 56(c) of the Federal Rules of Civil
Procedure if “[t]here is no genuine issue as to any material fact and . . . the moving party is
entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The rule “mandates the entry of
summary judgment, after adequate time for discovery and upon motion, against a party who fails
to make a sufficient showing 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.” Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). The party moving for summary judgment “bears the initial responsibility
of informing the district court of the basis for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323.
The nonmoving party must then “go beyond the pleadings” and “designate ‘specific facts
showing that there is a genuine issue for trial.’” Id. at 324.
On motion for summary judgment, “[t]he inquiry performed is the threshold inquiry of
determining whether there is a need for a trial—whether, in other words, there are any genuine
factual issues that properly can be resolved only by a finder of fact because they may reasonably
be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (l986).
To determine whether there is a genuine dispute as to any material fact, the court must consider
“all of the evidence in the record but refrain from making any credibility determinations or
weighing the evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir.
2007) (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). The court
must make all reasonable inferences in favor of the non-moving party, Reeves, 530 U.S. at 150;
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“however, a party cannot defeat summary judgment with conclusory allegations, unsubstantiated
assertions, or ‘only a scintilla of evidence.’” Id. (citing Little v. Liquid Air Corp., 37 F.3d 1069,
1075 (5th Cir. 1994)).
III. ANALYSIS
A. Breach of Contract
Because this case is before the court pursuant to its diversity jurisdiction, the court must
apply state substantive law. See Krieser v. Hobbs, 166 F.3d 736, 739 (5th Cir. 1999); Erie R. Co.
v. Tompkins, 304 U.S. 64, 79-80 (1938). According to the Mississippi Supreme Court, questions
regarding the construction and interpretation of contracts are questions of law. See Warwick v.
Gautier Util. Dist., 738 So. 2d 212, 214 (Miss. 1999). If the language of the contract “is clear,
definite, explicit, harmonious in all its provisions, and free from ambiguity throughout,” then the
court looks to the instrument itself as written. See Farragut v. Massey, 612 So. 2d 325, 329
(Miss. 1992) (citing Sumter Lumber Co. v. Skipper, 184 So. 296, 298-99 (1938)). “Under
Mississippi law, where the contract is not ambiguous, the intention of the contracting parties
should be gleaned solely from the wording of the contract.” Turner v. Terry, 799 So. 2d 25, 32
(Miss. 2001) (quoting Heritage Cablevision v. New Albany Elec. Power Sys., 646 So. 2d 1305,
1312 (Miss. 1994)). In order to establish a breach of contract claim, a plaintiff must prove: (1)
the existence of a valid and binding contract; (2) that the defendants have broken, or breached it;
and (3) that the plaintiff has been damaged thereby monetarily. See Favre Prop. Mgmt., LLC v.
Cinque Bambini, 863 So. 2d 1037, 1044 (Miss. Ct. App. 2004) (citing Warwick v. Matheney, 603
So. 2d 330, 336 (Miss. 1992)).
In the present case, the Defendants do not dispute that the Master Lease Agreement and
Master Lease Schedule executed by P&L are valid and binding contracts, clear and unambiguous
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on their face. Rather, the Defendants argue there was “no meeting of the minds or a contract
between [Philips and P&L]” because “[t]he proposed addendums are nothing more than
additional offers by Philips with no corporate acceptance by P&L.” This argument is without
merit. First, Defendant Lewis was authorized to execute the Addendum on behalf of P&L
pursuant to the unambiguous language of the Certificate of the Secretary, which both he and
Defendant Park signed on November 8, 2006. Second, the correspondence sent to P&L on
March 29, 2007 and April 4, 2007, did not constitute additional offers or addendums to the
Master Lease Agreement as the Defendants contend. Rather, they were merely notifications of
payment changes made pursuant to Section 5(b) of the Master Lease Schedule. Because the
Master Lease Agreement is a valid and binding contract, no further “meeting of the minds” was
required before Philips adjusted the payment schedule to reflect changes in United States
Treasury Notes.
The undisputed evidence before the court demonstrates that P&L breached the Master
Lease Agreement. Paragraph 13 of the Master Lease Agreement states that a Lessee is in default
if the “Lessee shall fail to pay any payment or other sum when due and such failure is not cured
within (10) days of such due date.” It is not disputed that after P&L fell behind on its payment
obligations in the amount of $100,000, it unilaterally terminated the Master Lease Agreement
and surrendered the Philips Pulsar. According to Paragraph 2 of the Master Lease Agreement,
“A lease may not be terminated or cancelled for any reason whatsoever, except as expressly
provided in the lease.” There is no provision under the Master Lease Agreement that allowed
P&L to terminate or cancel the lease prior to the expiration of the payment schedule. As such,
there is no genuine issue of material fact that P&L breached the Master Lease Agreement.
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Consequently, the court looks to the damages suffered as a result of the breach. Philips
suffered monetary damages in the amount of $896,638.36. At the time P&L surrendered the
Philips Pulsar, twenty-three payments remained at a base price of $26,975.02 ($25,210.30 + 7%
sales tax). The total remaining payments due under the Master Lease Agreement is $620,425.46
(23 x $26,975.02). The total accelerated amount due under the Master Lease Agreement is
$896,638.36, which is the sum of the total outstanding balance of $298,243.26, plus the total
remaining payments of $620,425.46, plus the BRV of $240,900, less the net proceeds from the
sale of the Philips Pulsar of $262,930.36.
Under the continuing Guarantees executed by Defendants Lewis and Park, each
Defendant promised to pay and guaranteed payment and performance of any and all obligations
and liabilities of P&L to Philips. The court concludes that both Guarantees are valid contracts,
clear and unambiguous on their face. The undisputed evidence demonstrates that Defendants
Lewis and Park are both in breach of their Guarantees by failing to prevent P&L from breaching
its obligations under the Master Lease Agreement. As a result of the breach, Philips has suffered
monetary damage.
B. Attorney’s Fees
As part of its summary judgment, Philips also seeks reasonable attorney’s fees. Pursuant
to Paragraph 14 of the Master Lease Agreement, “Lessee shall be responsible for all costs and
expenses incurred by Lessor in the exercise of its remedies hereunder, including without
limitation, reasonable attorneys’ fees.” Under Mississippi law, “Where a contractual provision
concerning the award of attorney’s fees is at issue, this court will apply its rule concerning the
interpretation of any contract, which is to ‘enforce a contract when its terms are clear and
unambiguous.’” Hamilton v. Hopkins, 834 So. 2d 695, 700 (Miss. 2003) (citing Ivison v. Ivison,
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762 So. 2d 329, 334 (Miss. 2000)). Section 9-1-41 of the Mississippi Code provides the
following general rule as to the awards of attorney’s fees:
In any action in which a court is authorized to award reasonable attorney’s fees,
the court shall not require the party seeking fees to put on proof as to the
reasonableness of the amount sought, but shall make the award based on the
information already before it and the court’s own opinion based on experience
and observation; provided, however, a party may, in its discretion, place before
the court other evidence as to the reasonableness of the amount of the award, and
the court may consider such evidence in making the award.
Miss. Code Ann. § 9-1-41.
Philips submitted an affidavit and invoices to support its demand of $21,635.32 in
attorney’s fees and expenses, and the Defendants offered nothing to challenge the accuracy of
this exhibit. Based on the information before it, the court finds that Philips’ demand is
reasonable and awards $21,635.32 in attorney’s fees and expenses to Philips.
C. Pre-Judgment and Post-Judgment Interest
Philips requests that it be awarded pre-judgment interest dating from March 18, 2010,
when P&L sent notice of its termination of the Master Lease Agreement and its intention to
surrender the Philips Pulsar. The Defendants did not respond to Philips’ request.
The issue of prejudgment interest is governed by applicable state law. Canal Ins. Co. v.
First Gen. Ins. Co., 901 F.2d 45, 47 (5th Cir. 1990). In Stockstill v. Gammill, the Mississippi
Supreme Court set forth the appropriate criteria for determining when an award of pre-judgment
interest is proper:
It is well settled that in Mississippi a [trial judge] is afforded discretion in
deciding whether to award prejudgment interest. “An award of prejudgment
interest rests in the discretion of the awarding judge. Under Mississippi law,
prejudgment interest may be allowed in cases where the amount due is liquidated
when the claim is originally made or where the denial of a claim is frivolous or in
bad faith. No award of prejudgment interest may rationally be made where the
principal amount has not been fixed prior to judgment.”
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Stockstill v. Gammill, 943 So. 2d 35, 50 (Miss. 2006) (quoting Coho Res. v. McCarthy, 829 So.
2d 1, 19-20 (Miss. 2002)); see also Upchurch Plumbing, Inc. v. Greenwood Util. Comm., 964
So. 2d 1100, 1117 (Miss. 2007). Further, “For prejudgment interest to be awarded, the party
must make a proper demand for the interest in the pleadings, including the date that it was
initially due.” Microtek Med., Inc. v. 3M Co., 942 So. 2d 122, 132 (Miss. 2006). At the time
P&L breached the Master Lease Agreement, the only outstanding matter of damages was the
amount Philips would recover from the sale of the Philips Pulsar. Because the sale was handled
shortly after the lawsuit was filed, the court finds that the amount of damages is sufficiently
liquidated to justify an award of pre-judgment interest. Philips meets the second requirement for
pre-judgment interest because it clearly requested “applicable interest from the date of default ”
in its Complaint. As such, the court finds that Philips is entitled to pre-judgment interest at the
rate of eight-percent per annum.1
While state law governs the award of pre-judgment interest in this federal diversity
action, Weitz Co., Inc. v. Mo-Kan Carpet, Inc., 723 F.2d. 1382, 1385 (8th Cir. 1983), postjudgment interest is allowed under federal law. 28 U.S.C. § 1961. Nissho-Iwai Co., Ltd. v.
Occidental Crude Sales, Inc., 848 F.2d 613 (5th Cir. 1988).
IV. CONCLUSION
Accordingly, because there is no genuine issue of material fact, summary judgment is
appropriate, and Plaintiff’s motion shall be GRANTED in the principal amount of $896,638.36.
The court further finds that Defendant Park and Defendant Lewis are personally liable according
to the terms of the personal guaranty agreements executed on November 8, 2006. Finally, the
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See MISS. CODE ANN. § 75-17-1, which provides, in part: “The legal rate of interest on all notes, accounts and
contracts shall be eight percent (8%) per annum, calculated according to the actuarial method, but contracts may be
made, in writing, for payment of a finance charge as otherwise provided by this section or as otherwise authorized
by law.”
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court awards Philips $21,635.32 in attorney’s fees and costs, pre-judgment interest at the rate of
eight-percent per annum, and post-judgment at the current federal rate.
A judgment in accordance with this opinion will issue this day.
This the 13th day of March, 2012.
/s/ David A. Sanders
UNITED STATES MAGISTRATE JUDGE
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