Universal Truck & Equipment Company, Inc. et al v. Caterpillar, Inc. et al
Filing
101
ORDER granting Defendants' #74 Motion for Summary Judgment dismissing Plaintiffs' claims and in favor of Defendants' counterclaims. So Ordered by Judge William E. Smith on 11/5/12. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
)
)
)
)
)
)
)
v.
)
)
CATERPILLAR, INC., et al.,
)
Defendants,
)
)
and
)
)
CATERPILLAR FINANCIAL SERVICES
)
CORPORATION and
)
SOUTHWORTH-MILTON, INC.,
)
Defendants and
)
Plaintiffs-in)
Counterclaim.
)
___________________________________)
UNIVERSAL TRUCK & EQUIPMENT
COMPANY, INC., NEW LONDON MINING,
MANUFACTURING & PROCESSING, LLC,
NICHOLAS E. CAMBIO, VINCENT A.
CAMBIO, and NICHOLAS E. CAMBIO,
as Trustee of THE NICHOLAS E.
CAMBIO, RODNEY A. MALAFRONTE AND
VINCENT A. CAMBIO TRUST,
Plaintiffs,
C.A. No. 10-466 S
ORDER
WILLIAM E. SMITH, U.S. District Judge.
Caterpillar, Inc. (“Caterpillar”) and Caterpillar Financial
Services
Corporation
(“Cat
Financial”
and,
collectively,
“Defendants”) have filed a motion for summary judgment on all of
the claims asserted by Universal Truck & Equipment Company, Inc.
(“Universal”),
LLC
(“New
New
London
London”),
Mining,
Nicholas
Manufacturing
E.
Cambio
&
(“Nick
Processing,
Cambio”),
individually and as Trustee of the Nicholas E. Cambio, Rodney A.
Malafronte, and Vincent A. Cambio Trust (“Trust”), and Vincent
A. Cambio (“Vincent Cambio” and, collectively, “Plaintiffs”) and
Defendants’
counterclaims.
For
the
reasons
that
follow,
Defendants’ motion for summary judgment is granted.
I.
Background
A.
On
The First Agreement
or
about
March
17,
2008,
New
London
entered
into
a
Security Agreement and Promissory Note (“First Agreement”) to
purchase and/or refinance twenty-two pieces of equipment (“First
Equipment”) from Cat Financial for a total purchase price of
$3,393,889.87.
(Caterpillar Inc.’s and Caterpillar Fin. Servs.
Corp.’s Mot. for Leave to File Corrected Statement of Facts and
Aff. of A. Neil Hartzell ¶ 1, ECF No. 77-1 (“Defs.’ SOF”).)
New
London agreed to pay Cat Financial approximately $64,405.17 per
month for sixty months.
(Id. ¶ 4.)
Also, Cat Financial was
granted a first priority, continuing security interest in the
First Equipment as collateral (“Pledged Collateral”).
3.)
(Id. ¶
Personal guarantees (“First Guarantees”) were executed by
Universal,
Nick
Cambio,
Vincent
Cambio,
and
Nick
Cambio
Trustee of the Trust (collectively, the “Guarantors”).
as
(Id. ¶
5.)
B.
In
The Second Agreement
mid-2009,
New
London
and
Cat
Financial
entered
into
discussions to explore ways to refinance the First Agreement.
2
(Id. ¶ 10.)
Cat Financial proposed selling the First Equipment
at quick-rate sales of sixty percent distressed value.
12.)
As
part
of
these
sales,
New
London
would
be
(Id. ¶
charged
approximately $40,000 for shipping and would remain liable for
any resulting deficiency.
(Id.)
On or about July 29, 2009, the parties agreed that, prior
to the execution of a refinancing, New London would immediately
surrender four pieces of equipment to be sold or redeemed as a
way to reduce the remaining deficiency. 1
(Defs.’ SOF ¶ 14.)
The
four units were to be stored on dealer Southworth-Milton, Inc.’s
(“Southworth”)
lot
for
seventy-five
days,
during
London could try and sell the equipment itself.
which
(Id.)
New
After
seventy-five days, the four pieces would be sold through Cat
Financial’s normal remarketing process.
remain
liable
for
any
deficiency
(Id.)
resulting
New London would
from
the
sales.
(Id.)
Cat Financial confirmed these terms in an e-mail to Melissa
Faria, a representative of New London.
(Id.)
Defendants aver
that, at no time during the negotiations was New London told by
anyone on behalf of Cat Financial that Cat Financial guaranteed
a price for any of the four pieces sold or that there would be
no deficiency owed following the sales.
1
(Id. ¶ 15.)
The four units turned over by New London were two 735
Articulated Trucks, a 988G Front Loader, and a D6TXL Tractor.
3
Plaintiffs dispute the events surrounding the sale of the
four
units.
They
contend
that,
in
addition
to
the
Second
Agreement, there was an oral agreement between Caterpillar, Cat
Financial,
Southworth,
and
New
London
stipulating
that
New
London would turn over four pieces of equipment to reduce the
deficiency on the First Agreement.
(Pls.’ Statement of Disputed
Facts ¶ 14, ECF No. 88-1 (“Pls.’ SODF”).)
They further contend
that the four pieces were valued at approximately $1,000,000,
and
the outstanding
reduced
by
that
balance
amount
of
the
regardless
First
of
how
Agreement
would
much
Financial
Cat
be
actually received when it sold them.
On or about July 31, 2009, Cat Financial and New London
refinanced the terms of New London’s prior purchase of eighteen
pieces
of
Equipment”
equipment,
and,
plus
collectively
six
with
additional
the
pieces
First
Equipment,
“Equipment”) for a total price of $2,490,272.25.
¶ 22.)
(“Second
the
(Defs.’ SOF
As part of the refinancing, the parties executed another
Security
Agreement
and
Promissory
Note
dated
July
31,
2009
(“Second Agreement”), stipulating that New London was to pay Cat
Financial $17,500 per month for nine months and $55,472.69 per
month for the following fifty-one months.
C.
(Id. ¶¶ 23-24.)
Subsequent Events
On or about August 9, 2009, the four pieces of equipment
were
moved
to
Southworth’s
lot
4
in
Milford,
Massachusetts.
Thereafter, on October 14, 2009, Joseph Kohler of Cat Financial
sent an e-mail to Ms. Faria informing her that, at the end of
the seventy-five-day period, the equipment was likely going to
be made ready for sale at Cat Financial’s Regional Sales Center
in North Carolina.
(Id. ¶ 29.)
Three of the units were also
listed on Cat Financial’s sales site, CatUsed.com, to generate a
world-wide audience of potential buyers.
(Id. ¶ 34.)
Two of
the four pieces were sold at an auction in North Carolina, the
988G Front Loader was sold to a private buyer, and the final
piece was sold to Southworth while it was held in Southworth’s
lot.
(Id.)
The four pieces sold at prices comparable to that
of other used equipment at the time, as well as the values
assigned by the Green Book. 2
(Id. ¶ 36.)
New London last made a payment under the Second Agreement
in April 2010.
(Id. ¶ 38.)
Cat Financial sent letters to New
London and the Guarantors notifying them that New London was in
default and, pursuant to the Second Agreement, the entire unpaid
principal amount was then due and payable along with all accrued
and accruing unpaid interest thereon.
(Id. ¶ 40.)
However, New
London has not responded to Cat Financial’s demands for payment
other than by selling, after this suit commenced and with Cat
2
The Green Book contains price ranges for used construction
equipment.
5
Financial’s
consent,
five
other
pieces
of
equipment.
(Id.
¶ 41.)
As of September 30, 2010, New London was indebted to Cat
Financial for approximately $2,500,000 in unpaid payments, as
well as interest, which accrues daily, cost of collection, and
attorney’s fees.
(Id. ¶ 42.)
On June 18, 2010, Plaintiffs filed suit in Rhode Island
Superior Court for Kent County alleging breach of contract and
fraud,
and
requesting
a
declaratory
judgment
and
injunctive
relief related to Defendants’ purported breach of contract and
fraudulent
alleging
misrepresentations.
breach
of
contract
Defendants
and
unjust
counterclaimed,
enrichment,
and
requested a permanent injunction for a writ of replevin.
also
On
November 16, 2010, Defendants removed the case to this Court.
Defendants now move for summary judgment on all of Plaintiffs’
claims and Defendants’ counterclaims.
II.
Legal Standard
Summary judgment is appropriate when, viewing the record in
the light most favorable to the non-moving party, there is no
genuine issue of material fact and the moving party is entitled
to judgment as a matter of law.
See Fed. R. Civ. P. 56; see
also Drumm v. CVS Pharmacy, Inc., 701 F. Supp. 2d 200, 206
(D.R.I.
2010).
“A
genuine
issue
of
fact
exists
where
the
evidence is such that a reasonable jury could return a verdict
6
for
the
nonmoving
party.”
Drumm,
701
F.
Supp.
2d
at
206
(quoting Taylor v. Am. Chemistry Council, 576 F.3d 16, 24 (1st
Cir. 2009)).
III. Discussion
A.
Plaintiffs’ Claims against Caterpillar
Viewing
the
facts
in
the
light
most
favorable
to
Plaintiffs, no reasonable jury could find that Caterpillar was a
party
to
any
Financial.
whatsoever
agreements.
of
Simply
in
any
the
negotiations
put,
of
there
the
is
with
no
documents
New
London
mention
relating
of
to
and
Cat
Caterpillar
the
loan
Plaintiffs’ alternative argument, that Caterpillar
and Cat Financial should be viewed as a single corporate entity,
and, thus, Caterpillar should be held liable, fails as well.
(See Pls.’ Obj. to Defs.’ Caterpillar, Inc.’s and Caterpillar
Fin. Servs. Corp.’s Mot. for Summ. J. 4, ECF No. 88-1 (“Pls.’
Obj.”).)
The only evidence to support this argument is the
deposition testimony of a New London employee stating that she
always assumed she was communicating with Caterpillar during her
talks with Cat Financial.
(See Dep. of Melissa A. Faria, Ex. I
101:6-102:18, ECF No. 77-2.)
However, an unfounded assumption
does not justify disregarding Caterpillar and Cat Financial’s
respective corporate forms.
See Scully Signal Co. v. Joyal, 881
F. Supp. 727, 737 (D.R.I. 1995) (“[T]he corporate entity should
be disregarded . . . only when the facts of a particular case
7
render
it
unjust
and
inequitable
to
consider
the
subject
corporation a separate entity.” (quoting R&B Elec. Co. v. Amco
Constr. Co., 471 A.2d 1351, 1354 (R.I. 1984))).
lack
of
evidence
demonstrating
Based on the
Caterpillar’s
involvement,
Plaintiffs’ claims against Caterpillar must fail.
B.
Plaintiffs’ Claims against Cat Financial
1.
Breach of Contract
Under Rhode Island law, to establish a claim for breach of
contract, a plaintiff must demonstrate that:
existed
between
the
parties;
(2)
the
(1) an agreement
defendant
breached
the
agreement; (3) the breach caused damages to the non-breaching
party.
Barkan v. Dunkin’ Donuts, Inc., 627 F.3d 34, 39 (1st
Cir. 2010) (citing Petrarca v. Fid. & Cas. Ins. Co, 884 A.2d
406, 410 (R.I. 2005)).
The allegations underlying the breach of contract claims
against Cat Financial stem from the four pieces of equipment
sold
to
reduce
the
deficiency
on
the
First
Agreement.
Plaintiffs contend that an oral agreement was reached where New
London would turn over four pieces of the Pledged Collateral,
valued
at
Obj. 8.)
roughly
$1,000,000,
According
to
to
Cat
Plaintiffs,
Financial.
this
transfer
(See
was
Pls.’
to
be
credited to the balance remaining on the First Agreement, and
8
the remaining debt would be refinanced. 3
story
goes,
the
full-market
value
of
Furthermore, so the
the
four
pieces
of
equipment was to be applied to the First Agreement, regardless
of their actual sale price.
The only evidence submitted by Plaintiffs to support this
claim is the Affidavit of Nick Cambio.
¶ 3, ECF No. 88-1.)
(Aff. of Nick Cambio
However, this affidavit does no more than
repeat the conclusory allegations made in the Complaint. 4
create
a
genuine
issue
of
material
fact,
the
affidavit
To
must
demonstrate personal knowledge of specific facts supporting the
existence of an oral agreement with the alleged provisions.
See
Perez v. Volvo Car Corp., 247 F.3d 303, 316 (1st Cir. 2001)
(“Statements predicated upon undefined discussions with unnamed
persons at unspecified times are simply too amorphous to satisfy
the requirements of Rule 56(e), even when proffered in affidavit
form by one who claims to have been a participant.”); see also
3
According to Plaintiffs, turning over the four pieces of
equipment to Cat Financial reduced the balance of the First
Agreement to approximately $2,400,000, which is the amount the
parties sought to refinance.
4
Perhaps if the affidavit provided more concrete facts, the
question would need to go to the jury.
Not only does the
affidavit fall far short, but Melissa Faria’s detailed notes of
the negotiations between Cat Financial and New London discredit
Nick Cambio’s version of the events.
(Ex. K, ECF No. 77-2.)
Nowhere in Ms. Faria’s notes is there any discussion of a
promise to sell the equipment at a private sale, and Cat
Financial explicitly mentioned that New London would remain
liable for any deficiency resulting from the sales.
9
Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46,
53 (1st Cir. 2000) (stating that affidavits simply reiterating
allegations
in
the
complaint
that
do
not
provide
specific
factual information made on the basis of personal knowledge are
not
enough
to
defeat
an
opposing
judgment); Fed. R. Civ. P. 56(e).
party’s
motion
for
summary
Therefore, no reasonable jury
could find the existence of an oral agreement based on the bald
assertions found in the affidavit.
Plaintiffs’
second
argument,
that
the
four
pieces
of
equipment were sold in a commercially unreasonable manner, is
also without merit.
(See Pls.’ Obj. 7.)
A disposition of
collateral is made in a commercially reasonable manner if it is
made “(1) In the usual manner on any recognized market; (2) At
the price current in any recognized market at the time of the
disposition;
or
(3)
Otherwise
in
conformity
with
reasonable
commercial practices among dealers in the type of property that
was the subject of the disposition.”
627(b).
The
dispositive;
practices
price
at
rather,
leading
reasonableness.
up
which
an
the
collateral
analysis
to
the
R.I. Gen. Laws. § 6A-9-
of
sale
the
is
sold
secured
determines
is
not
party’s
commercial
Suffield Bank v. LaRoche, 752 F. Supp. 54, 61
(D.R.I. 1990).
After
moved
two
the
of
seventy-five-day
the
pieces
of
waiting
equipment
10
period,
to
its
Cat
Financial
Regional
Sales
Center in North Carolina and advertised three of them on its
website,
CatUsed.com.
construction
world-wide
equipment,
audience
of
As
one
of
Cat
Financial’s
potential
the
leading
website
buyers. 5
sellers
of
generates
a
Considering
Cat
Financial’s extensive resources, as well as Plaintiffs’ failure
to
submit
any
evidence
demonstrating
otherwise,
a
reasonable
jury could not find that this was a commercially unreasonable
manner in which to market the four units.
Plaintiffs’ allegation that Cat Financial is in breach of
the implied covenant of good faith and fair dealing is also
unsupported
by
any
evidence.
(See
Pls.’
Obj.
5-6.)
“The
purpose of the covenant of good faith and fair dealing is to
protect the parties’ objectives and reasons for entering into a
contract.”
Hord Corp. v. Polymer Research Corp. of Am., 275 F.
Supp. 2d 229, 238 (D.R.I. 2003).
In determining whether a party
has breached the covenant, the Court must decide “whether or not
the actions in question are free from arbitrary or unreasonable
conduct.”
261
Havlik v. Johnson & Wales Univ., 490 F. Supp. 2d 250,
(D.R.I.
2007)
(quoting
Ross-Simons
of
Warwick,
Inc.
Baccarat, Inc., 66 F. Supp. 2d 317, 329 (D.R.I. 1999)).
v.
Again,
Plaintiffs have failed to submit any evidence that could lead a
jury to conclude that Cat Financial’s conduct was arbitrary or
5
Indeed, Cat Financial
London for one of the units.
procured
11
a
higher
bid
than
New
unreasonable.
See id.; see also Hord, 275 F. Supp. 2d at 238
(finding that the plaintiff acted within the confines of the
parties’
good
contractual
faith).
It
objectives,
follows
that
and
all
thus,
of
by
definition,
Plaintiffs’
breach
in
of
contract claims fail as a matter of law.
2.
Fraud/misrepresentation
Plaintiffs claim that, had New London not relied on the
misrepresentations
made
by
Cat
Financial,
turned over the four pieces of equipment.
it
would
not
have
(See Pls.’ Obj. 8.)
This argument fails because Plaintiffs have not presented any
facts establishing Cat Financial’s intent to deceive.
See Nat’l
Credit Union Admin. Bd. v. Regine, 795 F. Supp. 59, 70 (D.R.I.
1992).
Moreover, Plaintiffs’ vague, conclusory allegations do
not meet the heightened pleading requirement for fraud under
Rule 9(b) of the Federal Rules of Civil Procedure.
See Fed. R.
Civ. P. 9(b); N. Am. Catholic Educ. Programming Found., Inc. v.
Cardinale, 567 F.3d 8, 13 (1st Cir. 2009) (“Rule 9(b) requires
not only specifying the false statements and by whom they were
made but also identifying the basis for inferring scienter.”).
Accordingly, Plaintiffs’ fraud claim fails as a matter of law.
See Sanchez v. Triple-S Mgmt., Corp., 492 F.3d 1, 4-14 (1st Cir.
2007) (“A district court may enter summary judgment dismissing a
complaint alleging fraud if the complaint fails to satisfy the
requirements
of
Rule
9(b).”
(citing
12
Murr
Plumbing,
Inc.
v.
Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1070 (8th Cir.
1995))).
3.
Declaratory Judgment
Plaintiffs’ request for a declaratory judgment stating that
the balance remaining on the First Agreement is paid in full
and/or null and void and to award Plaintiffs’ costs is based on
harm caused by Cat Financial’s alleged breaches of contract and
fraudulent
misrepresentations.
(Compl.
¶
93,
ECF
No.
1-1.)
However, since both of the underlying substantive claims fail,
it follows that there is no basis for this claim as well.
See
W. Reserve Life Assur. Co. of Ohio v. Conreal LLC, 715 F. Supp.
2d 270, 276 (D.R.I. 2010) (finding that declaratory judgment
claim must be dismissed because the underlying arguments fail).
4.
Under
injunction
Injunctive Relief
Rhode
Island
“[a]
law,
plaintiff
in
must
order
to
obtain
demonstrate:
(1)
a
permanent
that
it
has
suffered an irreparable injury; (2) that remedies available at
law, such as monetary damages, are inadequate to compensate for
that
injury;
between
the
(3)
that,
plaintiff
warranted;
and
(4)
disserved
by
a
considering
and
that
the
defendant,
the
permanent
public
a
balance
remedy
interest
injunction.”
of
in
hardships
equity
would
eBay
not
Inc.
is
be
v.
MercExchange, L.L.C., 547 U.S. 388, 391 (2006); Animal Welfare
Inst. v. Martin, 623 F.3d 19, 26 (1st Cir. 2010).
13
Plaintiffs brought three counts for injunctive relief in
their
Complaint.
(Compl.
¶¶
100-05.)
Counts
VI
and
VIII
concern Cat Financial’s repossession of the Pledged Collateral
after the default and Count VII seeks to enjoin Cat Financial
from proceeding on the guarantees.
All three counts have no
basis because Plaintiffs have admitted they are in default of
both
agreements.
(Ex.
A
to
Defs.’
SOF,
Pls.
Answer
to
Caterpillar Fin. Servs. Corp.’s First Req. for Admis. Req. Nos.
14
&
38,
ECF
No.
77-2.)
Pursuant
to
both
agreements,
Cat
Financial has the right to demand payment of the deficiencies
remaining in the event of default, as well as to repossess the
Pledged
Collateral.
(Exs.
A
&
C
to
Aff.
of
(“Covell Aff.”), ECF No. 11-1 and ECF No. 11-3.)
Marion
Covell
Moreover, the
fact that Cat Financial is not in breach and did not sell the
four pieces of equipment in a commercially unreasonable manner
demonstrates that Plaintiffs will not suffer irreparable injury
if Cat Financial collects the deficiency.
391.
See eBay, 547 U.S. at
It follows that Plaintiffs’ injunctive relief claims fail
as a matter of law.
C.
Defendants’ Counterclaims
1.
Defendants
Breach of Contract
have
submitted
evidence
establishing
the
existence of a binding agreement between Cat Financial and New
London.
(Exs. A, C & E to Covell Aff., ECF Nos. 11-1, 11-3 and
14
11-5.)
As mentioned above, Plaintiffs have already admitted to
being in breach of both agreements, and Defendants have also
submitted testimony indicating that, as of September 30, 2010,
New
London
$2,500,000.
is
indebted
to
Cat
Financial
for
approximately
(Covell Aff. ¶ 16.)
Plaintiffs argue that summary judgment cannot be granted
because the deficiency owed by New London cannot be determined
until
the
amount
owed
to
New
London
resulting
from
the
commercially unreasonable sale of the four pieces of equipment
is valued and then credited to the deficiency.
(Pls.’ Obj. 8.)
However, the equipment was sold in a commercially reasonable
manner,
leaving
deficiency.
New
London
liable
the
total
remaining
Accordingly, Defendants are entitled to judgment on
their claim for breach of contract.
2.
for
See Barkan, 627 F.3d at 39. 6
Permanent Injunction or Writ of Replevin
Replevin is available in federal court under Rule 64 of the
Federal Rules of Civil Procedure under the law of the state
where the court is located. 7
Fed. R. Civ. P. 64(a).
Under Rhode
Island law, “[w]henever any goods or chattels of more than five
6
Defendants assert a claim for unjust enrichment in the
alternative to their breach of contract claim.
Because the
Court finds for Defendants on the breach of contract claim, it
does not reach Defendants’ unjust enrichment claim.
7
Defendants dispute whether this issue is substantive or
procedural in nature. (See Report and Recommendation 8-11, ECF
No. 36.) However, the Court does not need to address this issue
because Defendants prevail regardless. (See id.)
15
thousand dollars ($5,000) value shall be unlawfully taken or
unlawfully detained from the owner or from the person entitled
to the possession thereof . . . the owner or other person may
cause the same to be replevied by writ of replevin.”
R.I. Gen.
Laws § 34-21-1.
This
Court’s
previous
grant
of
a
writ
of
replevin
establishes Cat Financial’s right to present possession of the
collateral.
Brunswick
(finding
(See
Corp.
that
Prelim.
Inj.
¶
1,
ECF
No.
v.
Sposato,
389
A.2d
1251,
party
seeking
writ
of
replevin
55);
1253
see
(R.I.
must
also
1978)
prove
the
right of present possession arising out of general or special
ownership to succeed).
Financial
is
still
owed
Furthermore, due to the fact that Cat
approximately
$2,500,000,
it
appears
likely that it will need to sell the pieces of equipment that it
has repossessed in order to lower the deficiency.
U.S. at 391.
See eBay, 547
With respect to the balance of the equities, Cat
Financial’s need to sell the equipment outweighs any harm New
London may suffer.
See id.
Finally, the public has an interest
in requiring parties to honor their contractual agreements, and
therefore,
appropriate.
a
permanent
injunction
See id.
16
in
Defendants’
favor
is
IV.
Conclusion
For these reasons, Defendants’ motion for summary judgment
dismissing
Plaintiffs’
claims
and
counterclaims is GRANTED.
It is so ordered.
/s/ William E. Smith
William E. Smith
United States District Judge
Date: November 5, 2012
17
in
favor
of
Defendants’
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