VW Credit, Inc. v. Big Apple Volkswagen, LLC et al

Filing 93

OPINION AND ORDER granting 71 Motion for Summary Judgment. For the foregoing reasons, VCI's motion for summary judgment on damages as todefendants Koeppel, Samborski, and Salim is granted, and the defendants are jointly and severally liable to VCI in the amount of$1,146,758.11. The Clerk of Court is respectfully instructed to terminate the motion pending at docket entry number 71. No later than December 13,2012, the parties are directed to submit a joint letter (1) identifying the re maining claims in this case, and (2) proposing a schedule going forward. To the extent the parties cannot agree, the letter should identify areas of disagreement and each parties' proposal. Glenn Backer, Esq., counsel for defendant John Koeppel, is directed to filethis submission with the Court. Sixty days from the date of this opinion, and every 60 days thereafter, VCI is instructed to apprise the Court of the status of Big Apple's bankruptcy proceeding. SO ORDERED.(Signed by Judge Paul A. Engelmayer on 11/29/2012) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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VW CREDIT, INC.,
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Plaintiff,
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-v:
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BIG APPLE VOLKSWAGEN, LLC, JOHN KOEPPEL, :
GZREGORZ SAMBORSKI, and JULIAN SALIM,
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Defendants.
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11 Civ. 1950 (PAE)
OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:
On March 15, 2012, this Court granted summary judgment as to liability in favor of
plaintiff VW Credit, Inc. (“VCI”), on its contract claim against defendants John Koeppel,
Gzregorz Samborski, and Julian Salim (collectively, “defendants”). See Dkt. 65. VCI now
moves for summary judgment as to damages on that claim. The Court grants VCI’s motion in its
entirety.
I.

Background and Undisputed Facts1
Defendant Big Apple Volkswagen, LLC (“Big Apple”), not a party to this motion, is a

car dealership in the Bronx, New York. VCI, a Delaware corporation authorized to do business
in the state of New York, loaned Big Apple money for its inventory of motor vehicles and
provided a working capital line of credit, which Big Apple promised to repay. VCI’s loan to Big
Apple was embodied in two promissory notes.

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The Court’s account of the underlying facts of this case is drawn from the parties’ pleadings
and their submissions in support of and in opposition to the instant motion, as well as in support
of and in opposition to VCI’s earlier motion for summary judgment on liability (Dkt. 43).
Except where specifically referenced, no further citation to these sources will be made.

On June 12, 2006, Big Apple executed a promissory note, in the amount of $3,347,500,
and a master security agreement (collectively, “Wholesale Loan Agreement”). Under the terms
of the Wholesale Loan Agreement, Big Apple agreed, inter alia, to remit to VCI the portion of
each vehicle sale or lease which represented the amount of money that VCI had loaned Big
Apple under the loan. Big Apple also agreed to repay VCI $3,347,500, or such lesser sum as
might be outstanding under the note, on demand, with interest.
On March 19, 2007, Big Apple executed another promissory note, in the amount of
$250,000, and a master security agreement (collectively, “Capital Loan Agreement”). Under the
terms of the Capital Loan Agreement, Big Apple agreed to repay the sum of $250,000, plus
interest, at a schedule specified therein. Under both the Wholesale Loan Agreement and the
Capital Loan Agreement (collectively, “Loan Agreements”), Big Apple granted to VCI a security
interest in Big Apple’s inventory of vehicles, chattels, and proceeds (collectively, “Collateral”).
The Wholesale Loan Agreement and the Capital Loan Agreement are cross-defaulted, meaning
that a default under one agreement constitutes a default under the other.
On June 12, 2006, defendant Koeppel signed a continuing guaranty. Under it, Koeppel
guaranteed all of Big Apple’s obligations to VCI. The guarantee makes Koeppel a primary
guarantor under both Loan Agreements. Defendant Samborski signed a similar document on
October 19, 2008, as did defendant Salim on October 29, 2008. As a result of these guarantees
(collectively, the “Guaranty Agreements”), Samborski and Salim are also primary guarantors
under the Wholesale Loan Agreement and the Capital Loan Agreement.
Big Apple sold 78 vehicles from its inventory. However, it did not remit payment to
VCI, as required under the Wholesale Loan Agreement, in the amount of $1,237,615.86. In
response to Big Apple’s failure to pay VCI for this sum, VCI accelerated payment of all amounts

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due under the Loan Agreements. By letter dated March 17, 2011, VCI notified guarantor
defendants Koeppel, Samborski, and Salim of this acceleration. As of that date, the accelerated
amount immediately due and payable to VCI from Big Apple was $3,888,059.84 under the
Wholesale Loan Agreement and $54,263.45 under the Capital Loan Agreement.
On March 21, 2011, VCI filed its complaint in this action. It brought claims for breach of
contract and breach of guarantees, as well as a claim for replevin of the Collateral. On April 1,
2011, the Court stayed the case for 90 days to monitor defendant Big Apple’s bankruptcy
proceeding. On July 1, 2011, defendants Samborski and Salim filed an answer; on July 8, 2011,
defendant Koeppel filed an answer and cross-claims against Samborski and Salim. On July 11,
2011, Samborski and Salim answered the cross-claims. This case remains stayed against
defendant Big Apple, which is the subject of an ongoing bankruptcy proceeding.
On March 15, 2012, this Court granted summary judgment in VCI’s favor as to liability
on its breach of contract claim against defendants Koeppel, Samborski, and Salim. On May 16,
2012, VCI filed its motion for summary judgment as to damages on its breach of contract claim
against these three defendants. On June 18, 2012, defendants opposed the motion. On June 25,
2012, VCI filed its reply.
II.

Legal Standard
A party moving for summary judgment has the burden of establishing that there is no

genuine dispute as to any material fact and that the moving party is entitled to judgment as a
matter of law. See Fed. R. Civ. P. 56(a) & (c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247–48 (1986); Marvel Characters, Inc. v. Simon, 310 F.3d 280, 285–86 (2d Cir. 2002).
Because summary judgment is an extreme remedy, cutting off the rights of the non-moving party
to present a case to the jury, the moving party bears the burden of demonstrating the absence of a

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material factual question, and in making this determination, the court must view all facts “in the
light most favorable” to the non-moving party. Dickerson v. Napolitano, 604 F.3d 732, 740 (2d
Cir. 2010).
Once the moving party discharges its burden of proof under Rule 56(c), the party
opposing summary judgment can defeat the motion for summary judgment “only by coming
forward with evidence that would be sufficient, if all reasonable inferences were drawn in [its]
favor, to establish the existence of [an] element at trial.” Spinelli v. City of N.Y., 579 F.3d 160,
166–67 (2d Cir. 2009) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23; Fed. R. Civ. P.
56(c)) (additional citations omitted). Rule 56(e) “provides that a party opposing a properly
supported motion for summary judgment may not rest upon mere allegation or denials of his
pleading.” Anderson, 477 U.S. at 256. Indeed, “the mere existence of some alleged factual
dispute between the parties” alone will not defeat a properly supported motion for summary
judgment. Id. at 247 (emphasis in original). Rather, enough evidence must favor the nonmoving party’s case such that a jury could return a verdict in its favor. Id. at 248.
III.

Discussion
VCI seeks a total, under the Loan Agreements, of $1,146,758.11 from defendants.

Pursuant to the Wholesale Loan Agreement, defendants agreed to pay VCI the amounts due
thereunder, as well as interest, as set by VCI. Affidavit of Crystal Jeffrey-Alexander in Support
of VCI’s Motion for Summary Judgment (Dkt. 72) (“Alexander Aff.”) ¶ 2 & Ex. A. Defendants
also agreed to pay to VCI “any collection or the cost of enforcing the terms of [the Wholesale
Loan Agreement], including reasonable attorneys’ fees and all costs of assembling, pick up and
transporting any Collateral, and any monies advanced on behalf of [defendants] . . . to keep or
protect the Collateral.” Id. ¶ 3 & Ex. A. Pursuant to the Capital Loan Agreement, defendants

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agreed to pay VCI the amounts due thereunder, as well as interest, as set by VCI. Id. ¶ 4 &
Ex. B.
In support of its motion for summary judgment, VCI has submitted records, bates
stamped VCI 2 through VCI 234, detailing the principal due and interest accrued on the Loan
Agreements. Id. Ex. C. As of April 23, 2012, the principal amount owed to VCI by defendants
under the Wholesale Loan Agreement is $514,835.20, after deductions for credits and cash
collateral carve-outs paid to Big Apple’s bankruptcy trustee. Id. ¶ 6 & Ex. C at 1. Also as of
April 23, 2012, the interest amount owed to VCI by defendants is $59,476.29. Id. ¶ 8 & Ex. C at
1. As to the Capital Loan Agreement, as of April 23, 2012, the principal amount owed to VCI by
defendants is $54,166.98 and the amount of interest accrued is $2,245.24. Id. ¶¶ 9–10 & Ex. E.
VCI has also submitted records, bates stamped VCI 235 through VCI 443, consisting of
attorney billing records and client invoices from the firms McDowell, Rice, Smith & Buchanan
and Deily, Mooney & Glastetter, LLP, detailing attorneys’ fees accrued by VCI in litigation this
matter. Id. Exs. F–G. As of March 27, 2012, VCI’s attorneys’ fees and expenses totaled
$349,204.65. Id. ¶ 11 & Exs. F–G.
Finally, VCI has submitted records, bates stamped VCI 444 through VCI 464, consisting
of invoices from (1) private security companies it contracted to protect its Collateral and to
prevent Big Apple from disposing of the Collateral, and (2) a management company VCI funded
to protect the Collateral and the value of the Big Apple dealership, and to maintain priority of its
security interests in the Collateral. Id. ¶¶ 12–15 & Exs. H–I. The invoices reflect $50,578.10 in
private security expenses and $116,242.65 in management expenses. Id. Exs. H–I.
Because this Court has already found, in its March 15, 2012 decision, that defendants are
liable to VCI for all breach of contract damages owed under the Loan Agreements, the inquiry at

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hand is whether there is any genuine dispute that the amounts recited above are properly
classifiable as breach of contract damages sustained by VCI. Defendants Samborski and Salim
filed a Local Rule 56.1 counterstatement, see Dkt. 81, and defendant Koeppel filed a separate
one, see Dkt. 83. Neither of these counterstatements raises any genuine dispute that defendants
do not owe VCI the amounts claimed.
Koeppel’s counterstatement contains literally no citations to the record, despite the
requirement of Local Rule 56.1(d) that “[e]ach statement by the movant or opponent [in a
summary judgment motion], including each statement controverting any statement of material
fact, must be followed by citation to evidence which would be admissible, set forth as required
by Fed. R. Civ. P. 56(c).” Where an assertion made in a statement on a motion for summary
judgment contains “no citations or where the cited materials do not support the factual assertions
in the statements, the Court is free to disregard the assertion.” Holtz v. Rockefeller & Co., 258
F.3d 62, 73–74 (2d Cir. 2001) (collecting cases). Koeppel’s counterstatement does no more than
deny, admit, or deny sufficient knowledge to respond as to each of the enumerated statements in
VCI’s Rule 56.1 statement.
In his memorandum of law, Koeppel argues generally that VCI failed to mitigate its
damages, and that the amount reflect in the invoices for attorneys’ fees is excessive. Koeppel
similarly states in his affidavit that he “should not be held response for $246,721.12 of legal
fees.” Dkt. 84 at 2. But Koeppel does nothing beyond making conclusory and general
assertions. Notably, he does not question the propriety of any individual billing entry; nor does
he muster any factual support for his broad assertion that the bills by VCI’s outside counsel were
excessive. Such advocacy alone is insufficient, as “ultimate or conclusory facts and conclusions

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of law . . . cannot be utilized on a summary judgment motion.” BellSouth Telecomms., Inc. v.
W.R. Grace & Co.-Conn., 77 F.3d 603, 615 (2d Cir. 1996).
The Court has, in any event, independently reviewed the documentation that VCI has
submitted in support of its requested attorney fees. It includes 116 pages of billing records
submitted to VCI by its outside counsel, the law firm of McDowell, Rice, Smith & Buchanan,
covering the period between March 15, 2011 and March 19, 2012. See Alexander Aff. Exs. F1
& F2. It also includes 93 pages of billing records submitted to VCI from its local counsel, the
law firm of Deily, Mooney & Glastetter, covering the period between March 17, 2011 and
February 29, 2012. See id. Exs. G1 & G2. These records reflect extensive work done in
connection with Big Apple’s bankruptcy proceeding and in related litigations. Consistent with
this, the docket sheet of Big Apple’s bankruptcy proceeding, which VCI’s counsel has furnished
the Court, reflects that it has been contentious. See Dkt. 91, Ex. 1 (Big Apple bankruptcy docket
sheet). The time sheets are appropriately detailed and do not appear to reflect duplicative or
excessively staffed work. They reflect substantial time devoted to projects and tasks including,
but not limited to: preparation of a motion in bankruptcy court to prohibit the debtor’s use of
cash collateral, see, e.g., Alexander Aff. Exs. F1 at 12, G1 at 7, G2 at 10; preparation for and
participation in a hearing in this court seeking a temporary restraining order and replevin, see,
e.g., id. Exs. F1 at 17, G1 at 12; participation for a hearing and oral argument regarding the
appointment of a bankruptcy trustee, see, e.g., id. Exs. F1 at 36, 44, G2 at 19; meetings with the
trustee, see, e.g., id. Exs. F1 at 39, G2 at 3; work on an adverse action against the Salims for
fraudulent transfers, see, e.g., id. Ex. F1 at 58; preparation of the summary judgment motion on
liability in this case, see. e.g., id. Exs. F2 at 15, G1 at 22; participation in a hearing on defense
counsel’s motion to withdraw as counsel in this case, see, e.g., id. Ex. G1 at 27; filing an

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objection to and participating in a hearing regarding debtor’s counsel’s fee application, see, e.g.,
id. Ex. G2 at 48–50; participation in an extended sales process directed by the trustee; and the
manifold other activities that facilitate such work, such as legal research, correspondence, and
meetings with counsel and parties, see, e.g., id. Exs. F & G, passim. In addition to attorneys’
fees, VCI’s totals reflect the substantial costs incurred by counsel in traveling to New York for
court appointments, see, e.g., id. Exs. G1 at 13–14, G2 at 19, and in paying court fees and other
litigation expenses, see, e.g., id. Ex. G2 at 17. Finally, the invoices from the private security
company and the management company hired to protect the Collateral reflect the reasonable
costs of doing so. See id. Exs. H–I.
In sum, VCI’s documentation in support of its claim for attorneys’ fees and related costs
is facially adequate and reasonable. In the absence of any objection to any specific portion of the
legal bills for which VCI seeks reimbursement, the Court finds this documentation sufficient to
justify including such fees and costs within VCI’s damages. Koeppel’s general protestations of
excessiveness are insufficient to raise a genuine issue of material fact. See Bank of America,
N.A. v. Klein, No. 3:10-cv-987 (JBA)(WIG), 2012 WL 5286962, at *5 (D. Conn. Oct. 23, 2012)
(Report & Rec.) (finding defendant’s conclusory statement that fees are unreasonable insufficient
to defeat motion for summary judgment); cf. Barbour v. City of White Plains, No. 11 Civ. 2229,
2012 WL 5503601, at *3 (2d Cir. Nov. 12, 2012) (slip op.) (defendants’ non-specific objection to
fee award insufficient to preserve argument for appeal). Summary judgment as to damages in
VCI’s favor is, therefore, appropriate against Koeppel, in the amount of $1,146,758.11.
The submissions by Samborski and Salim are similarly inadequate. The only citations to
the record in the counterstatement submitted by defendants Samborski and Salim are to two
identical affidavits, likewise submitted by these defendants. It is true that, pursuant to Rule 56,

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affidavits or declarations are materials in the record which may be cited to in support of a
statement made on summary judgment. Fed. R. Civ. P. 56(c)(1)(A). However, defendants’
affidavits themselves contain nothing more than conclusory statements, including that: “[a]t the
time VCI took possession of the dealership, they had held over $300,000.00 in credits owed to
Big Apple Volkswag[e]n for sales recently finalized”; “[a]t the time VCI seized control of the
dealership Big Apple Volkswag[e]n was owed in excess of $150,000.00”; the amount of money
that VCI claims it spent to keep the dealership open is “outrageous”; and the amount of
attorneys’ fees claimed by VCI “is not reasonable or fair.” Affidavits of Gzregorz Samborski
and Julian Salim in Opposition to VCI’s Motion for Summary Judgment ¶¶ 8, 13, 18, 22 (Dkts.
88, 89). None of these statements are supported by citation to the record. They therefore do not
assist these defendants on summary judgment. See BellSouth Telecomms., 77 F.3d at 615 (“[A]n
adverse party may not rest upon mere conclusory allegations or denials. The party opposing the
motion [for summary judgment] must set forth concrete particulars. It is not sufficient merely to
assert a conclusion without supplying supporting arguments or facts.” (citations omitted)).
Because “conclusory statements are insufficient to raise a triable issue of material fact,” they are
“properly disregarded” on a motion for summary judgment. Id. Because defendants Samborski
and Salim, like defendant Koeppel, fail to raise any genuine issues of material fact, summary
judgment as to damages in VCI’s favor is appropriate against them, in the amount of
$1,146,758.11.

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CONCLUSION

For the foregoing reasons, VCl's motion for summary judgment on damages as to
defendants Koeppel, Samborski, and Salim is granted, and the defendants are jointly and
severally liable to VCI in the amount of$I,146,758.11. The Clerk of Court is respectfully
instructed to terminate the motion pending at docket entry number 71.
No later than December 13,2012, the parties are directed to submit ajoint letter (1)
identifying the remaining claims in this case, and (2) proposing a schedule going forward. To
the extent the parties cannot agree, the letter should identify areas of disagreement and each
parties' proposal. Glenn Backer, Esq., counsel for defendant John Koeppel, is directed to file
this submission with the Court.
Sixty days from the date of this opinion, and every 60 days thereafter, VCI is instructed
to apprise the Court of the status of Big Apple's bankruptcy proceeding.

SO ORDERED.

paUl~g~n:ay~*

United States District Judge

Dated: November 29, 2012
New York, New York

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