First Dakota National Bank v. Ruba

Filing 73

Opinion and Order granting 28 Motion for Partial Summary Judgment. Signed by U.S. District Judge Roberto A. Lange on 12/21/2016. (JLS)

FILED
UNITED STATES DISTRICT COURT

DEC 21 2016

DISTRICT OF SOUTH DAKOTA

mL.

SOUTHERN DIVISION

FIRST DAKOTA NATIONAL BANK,

4:I6-CV-04007-RAL

Plaintiff,
OPINION AND ORDER GRANTING
MOTION FOR PARTIAL SUMMARY
JUDGMENT

JEROME N. RUBA,a/k/a JERRY RUBA,
Defendant.

JEROME N. RUBA,a/k/a JERRY RUBA,
Counterclaim Plaintiff,

FIRST DAKOTA NATIONA BANK,
Counterclaim Defendant.

JEROME N. RUBA,a/k/a JERRY RUBA,

Third-Party Plaintiff,

BAILEY RIDGE PARTNERS, LLC; JACK
GRUBB;
NICOLE
GRUBB-NEARMAN;
JASON
GRUBB;
GRUBB
FAMILY
PARTNERSHIP;FLOYD C. DAVIS; VERLYN
NAFE; FRANK MANTHEI; and PAUL
ENGLE,

Third-Party Defendants.

On December 16, 2016, this Court conducted a motion hearing on the pending motions in

this case and explained how it intended to rule on certain motions. This opinion and order
formalizes and explains this Court's ruling on the pending motion for partial summary judgment.
Third-party plaintiff Jerry Ruba sued third-party defendant Bailey Ridge Partners, LLC

(Bailey Ridge) for, among other things, breaching a promissory note. Doc. 10. Because there
are no questions of material fact and Ruba is entitled to judgment as a matter of law, this Court
grants Ruba's motion for summary judgment on his claim that Bailey Ridge breached the
promissory note.
I.

Facts

In March 2011, Bailey Ridge gave Ruba a promissory note in the amount of$664,581.30
in exchange for an account receivable held by Ruba in the same amount. Doc. 30 atf 3; Doc. 31
at 3. Ruba delivered and assigned the accoxmt receivable to Bailey Ridge. Doc. 30 at f 6.

Bailey Ridge was capable of contracting with Ruba, and its president Nicole Grubb-Nearman
properly executed the promissory note. Doc. 30 at

4, 5.

The promissory note required Bailey Ridge to make payment in full by March 24, 2014.

Doc. 30 at f 8; Doc. 31 at 3. Although Bailey Ridge made two small payments on the
promissory note, it failed to fully pay the note by March 24, 2014. Doc. 30 at

9, 10; Doc. 70-

1. Despite Ruba's demands on Bailey Ridge to make payment. Bailey Ridge remains in default
under the promissory note. Doc. 30 at^11, 12.
In January 2016, First Dakota National Bank (First Dakota) sued Ruba in this Court for
allegedly failing to pay First Dakota money Ruba owed under a promissory note. Doc. 1. Ruba
filed an answer asserting that the promissory note was part of a larger loan package between him.

First Dakota, Bailey Ridge, and Bailey Ridge's members. Doc. 7. Ruba also filed a first-

amended third-party complaint against Bailey Ridge and its members Jack Grubb, Nicole Grubb-

Nearman, Jason Grubb, the Grubb Family Partnership, Floyd C. Davis, Verlyn Nafe, Frank
Manthei, and Paul Engle. Doc. 10.

On June 20, 2016, Ruba moved for partial summary judgment on Count III of his firstamended complaint, which alleged that Bailey Ridge had breached the promissory note. Doc.

28. Bailey Ridge initially opposed the motion under Federal Rule of Civil Procedure 56(d),
arguing that it was unable to fiilly respond to Ruba's statement of undisputed material facts
because the parties were not scheduled to exchange initial disclosures until July 22, 2016, and
because it had yet to depose Ruba. Docs. 35-38. The deadline for initial disclosures has passed.
At the motion hearing, the parties acknowledged that Ruba had been deposed and that the third-

party defendants, including Bailey Ridge, had received notice ofthe taking of Ruba's deposition.
On October 3, 2016, the attorney for Bailey Ridge and its members moved to withdraw,

claiming that Bailey Ridge was failing to communicate with him. Doc. 53. Bailey Ridge's

attorney filed an amended motion to withdraw on October 27, 2016, Doc. 55, after this Court
denied the initial motion for failure to comply with the local rules. Doc. 54. The Bailey Ridge

attorney averred that he had made multiple attempts to communicate with Bailey Ridge and its
members in an attempt to comply with this Court's June 29, 2016 scheduling order, but Bailey

Ridge and its members had been vmcooperative. Doc. 55. The attorney further averred that

Bailey Ridge and its members were aware of the motion to withdraw and had no objections to it.
Doc. 55.

This Court issued an order on November 16, 2016, granting the attorney's motion to

withdraw as counsel for Bailey Ridge and its members. Doc. 61. The order cautioned Bailey

Ridge and its members to hire counsel and reminded them that a corporate entity cannot proceed

pro se.' The order noted that there are two pending motions in this case—Ruba's motion for
summary judgment on Count III of his first-amended third-party complaint and Ruba's motion to

compel discovery responses—and explained that this Court would likely grant the motions if
Bailey Ridge and its members did not participate in the hearing this Court planned on holding in
December 2016.

The hearing took place on December 16, 2016. First Dakota, Ruba, and Verlyn Nafe

appeared through counsel while Jason Grubb, Nicole Grubb-Nearman, Jack Grub, Paul Engle,
and Floyd C. Davis appeared pro se by telephone. Bailey Ridge and the Grubb Family
Partnership were unrepresented by counsel and Frank Manthei did not appear at all. This Court

explained that it would grant Ruba's motion for summary judgment once Ruba filed an updated
affidavit establishing the amount Bailey Ridge currently owes on the promissory note. Ruba
filed an affidavit showing that as of December 16, 2016, Bailey Ridge owes $851,271.59 under
the promissory note. Doc. 70 at 2.
II.

Discussion

Ruba complied with Local Rule 56.1(A) of the Civil Local Rules of Practice of the
United States District Court for the District of South Dakota by filing a statement of material

facts along with his motion for summary judgment. Doc. 30. Local Rule 56.1(B) requires the
party opposing a motion for summary judgment to "respond to each numbered paragraph in the
moving party's statement of material facts with a separately numbered response and appropriate
citations to the record." D.S.D. Civ. LR 56.1(B). All material facts set forth by the moving

^A corporation is technically in default on the date its counsel is permitted to withdraw unless
substitute coimsel has entered an appearance. Ackra Direct Mktg. Corp. v. Fingerhut Corp., 86
F.3d 852, 856 (8th Cir.1996). TOs rule also applies to partnerships and limited liability

corporations. Tinker & Chance v. Zowie Intertainment. Inc.. 15 F. App'x 827, 828
(Fed.Cir.2001) ("All artificial entities, such as corporations, partnerships, or associations, may
only appear in federal court through a licensed attomey.").

party are deemed admitted "unless controverted by the opposing party's response to the moving
party's statement of material facts." D.S.D. Civ. LR 56.1(D). Rule 56 of the Federal Rules of

Civil Procedure contains a similar provision, stating that when a party "fails to properly address
another party's assertion of fact as required by Rule 56(e), the court may . . . consider the fact
undisputed." Fed. R. Civ. P. 56(e)(2).

Rather than responding to Ruba's statement of material facts as required by Local Rule
56.1(B) and Federal Rule of Civil Procedure 56(e), Bailey Ridge asked that Ruba's motion be

denied or continued under Rule 56(d) until it could complete discovery. Does. 35-38. Bailey
Ridge made a general assertion that discovery would show genuine disputes of material fact.
Doe. 36 at 4; Doc. 38 at 13. Rule 56(d) allows a court to defer considering or deny a motion for
summary judgment if the "nonmovant shows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify its opposition." Fed. R. Civ. P. 56(d). Here,

Bailey Ridge claimed over five months ago that it could not properly respond to Ruba's

statement of material facts because there had been no discovery or deposition of Ruba. Docs.
36-38. There now has been discovery and a deposition in the case of Ruba. Bailey Ridge has
been unrepresented for over a month and has not given any indication of any genuine dispute of

material fact.^ This Court denies Bailey Ridge's request for relief under Rule 56(d) because
Bailey Ridge has failed to diligently pursue discovery, failed to secure counsel, and failed to
offer anything other than vague assertions that additional discovery will show that there are

^Instead, the individual defendants, purporting to act on Bailey Ridge's behalf, emailed the clerk
of court just minutes before the December 16 hearing asking this Court for an additional sixty
days to respond to Ruba's motion for summary judgment. None of the individual defendants are
attorneys and thus none can be legal counsel for Bailey Ridge. The motion for partial summary
judgment seeks relief only on the claim against Bailey Ridge. This Court allowed each
individual defendant to participate by telephone in the hearing. None sought to identify any
genuine issue of material fact on Count III ofthe first-amended third-party complaint.

disputes of material fact.

United States v. Bob Stofer Oldsmobile-Cadillac. Inc.. 766 F.2d

1147, 1153 (7th Cir. 1985)("A party who has been dilatory in discovery may not use Rule 56[d]
to gain a continuance where he has made only vague assertions that further discovery would
develop genuine issues of material fact."); lOB Charles Alan Wright et al., Federal Practice and
Procedure § 2741 (4th ed.) ("[A] request for relief under Rule 56(d) is extremely unlikely to
succeed when the party seeking the delay had failed to take advantage of discovery.").

Because Bailey Ridge failed to properly respond to Ruba's statement of material facts,
this Court deems those facts to be undisputed. The only remaining question is whether the
undisputed facts show that Ruba is entitled to judgment as a matter of law on Count III of his
first-amended third-party complaint.

Fed. R. Civ. P. 56(a) (explaining that summary

judgment is proper "if the movant shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law"). The undisputed facts show that
Bailey Ridge agreed to repay Ruba the $664,581.30 plus interest when its president Nicole
Grubb-Nearman signed the promissory note, that Bailey Ridge has failed to fully repay this
amount by March 24, 2014 as promised, and that as of December 16, 2016, Bailey Ridge owes
Ruba $851,271.59 under the promissory note. Bailey Ridge has not established any defenses to
payment or raised any questions about the validity of the promissory note.

Under these

circumstances, Ruba is entitled to judgment as a matter of law on Count III of his first-amended
third-party complaint. See Iowa Mortg. Ctr.. LLC v. Baccam. 841 N.W.2d 107, 112-113 (Iowa
2013); First NatT Bank v. Felt. 368 N.W.2d 588, 591 (S.D. 1985).
III.

Conclusion

For the reasons explained above, it is hereby

ORDERED that Ruba's Motion for Partial Summary Judgment, Doc. 28, is granted. It is
further

ORDERED that summary judgment enters against Bailey Ridge for $851,271.59 through
December 16,2016.

DATED this "3/

day ofDecember, 2016.
BY THE COURT:

ROBERTO A. LANGE
UNITED STATES DISTRICT JUDGE