Navistar Financial Corporation v. C.C.C. Trucking, Inc. et al

Filing 29

MEMORANDUM AND ORDER: For the reasons set forth herein, Navistar is ORDERED to file the submissions discussed in this order on or before 4/2/2012. Signed by District Judge Aleta A. Trauger on 3/13/12. (dt)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
NAVISTAR FINANCIAL CORPORATION,

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Plaintiff,
v.
C.C.C. TRUCKING, INC. and
CHRIS CUNNINGHAM,
Defendants.

Case No. 3:10-cv-1244
Judge Aleta A. Trauger

MEMORANDUM AND ORDER
Pending before the court is the plaintiff’s motion for summary judgment against
defendants C.C.C. Trucking, Inc. (“CCC Trucking”) and Chris Cunningham (“Cunningham”)
(collectively, “defendants”) (Docket No. 26), which the defendants have not opposed. For the
reasons stated herein, the plaintiff is entitled to summary judgment, but the court will defer
entering judgment until it can review additional submissions from the plaintiff regarding
damages.
BACKGROUND1
CCC Trucking was a trucking company owned and operated by Cunningham. Between
January 31, 2006 and September 24, 2008, CCC Trucking (through Cunningham) entered into

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Unless otherwise noted, all facts are drawn from the plaintiff Navistar Financial
Corporation’s (“Navistar”) Statement of Undisputed Facts in Support of its Motion for Summary
Judgment. (Docket No. 28.) Because the defendants have not addressed Navistar’s statement of
undisputed facts, the court will consider the facts cited therein to be undisputed for purposes of
the motion. See Fed. R. Civ. P. 56(e) (2012). Regardless, the defendants expressly admitted the
substance of these undisputed facts in their pleadings and in discovery. (See, e.g., Docket No.
26, Ex. 1 (Defendants’ Responses to Navistar’s Requests for Admissions); Docket No. 20
(Defendants’ Answer to First Amended Complaint).)
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six successive Commercial Loan and Security Agreements (“Loan Agreements”) with Navistar
to finance the purchase of eight semi-tractor trucks.2 In relevant part, each Loan Agreement
contains the following provisions:
•

A choice of law provision stating that the agreement shall be governed by
the law of Illinois and applicable federal law;

•

A default clause, which provides that, in the event of default, CCC
Trucking is liable to Navistar for any deficiency which remains after the
repossession and disposition of the sleeper tractors by Navistar;

•

A “Late Payments” clause, which states that “Borrower promises to pay
past due interest accrued from maturity on each installment in default
more than 10 days at the highest rate permitted by law. Borrower also
agrees to pay all expenses actually incurred, including attorney fees, in
collecting any amount payable under this Agreement, all to the extent
allowed by law.”

(Docket No. 16, First Am. Compl., Exs. B, E, H, K, N, Q (Loan Agreements).)
As a condition of Navistar’s providing financing to CCC Trucking, Cunningham
executed a Guaranty in which he personally guaranteed the prompt payment of all monetary
obligations for which CCC Trucking might become liable to Navistar, including the subsequent
Loan Agreements. The Guaranty holds Cunningham liable for interest and all reasonable
expenses, including attorneys’ fees, incurred by Navistar in enforcing Cunningham’s obligations

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The Loan Agreements (hereinafter “Loan Agreement No. [X]”) were entered into as
follows, with dates of execution in parentheses:
1.
2.
3.
4.
5.
6.

Loan Agreement No. 1 (dated January 31, 2006): one tractor;
Loan Agreement No. 2 (dated September 27, 2007): one tractor;
Loan Agreement No. 3 (dated March 28, 2008): one tractor;
Loan Agreement No. 4 (dated April 15, 2008): one tractor;
Loan Agreement No. 5 (dated July 7, 2008): one tractor;
Loan Agreement No. 6 (dated September 24, 2008): three tractors.
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under the Guaranty.3 As with the Loan Agreements, the Guaranty by its terms is governed by
Illinois law.
Thus, under the Guaranty and the Loan Agreements, both CCC Trucking and
Cunningham are liable for any defaults on the underlying loans, along with interest at the
“highest rate permitted by law” and all costs of collection, including attorneys’ fees.
The defendants failed to make required installment payments with respect to all six of the
Loan Agreements. Following default, Navistar repossessed the equipment and, upon notice to
the defendants, sold each piece of equipment at a private sale pursuant to the terms of the Loan
Agreements. The proceeds from each sale recovered only a portion of the defendants’
outstanding payment obligations, resulting in deficiencies with respect to each piece of
equipment, as follows:
1.

Loan Agreement No. 1: $10,950.52;

2.

Loan Agreement No. 2: $40,495.15;

3.

Loan Agreement No. 3: $23,510.02;

4.

Loan Agreement No. 4: $21,940.07;

5.

Loan Agreement No. 5: $18,965.55;

6.

Loan Agreement No. 6: $77,032.12.4

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Although Navistar states that it is undisputed that the Guaranty bound both defendants as
guarantors, the Guaranty was signed only by Cunningham as “guarantor.” (See Docket No. 16,
First Am. Compl., Ex. A (Guaranty agreement).) Therefore, the court interprets the Guaranty as
binding only against Cunningham.
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Loan Agreement No. 6 financed the purchase of three tractors. After repossession and
sale, Navistar was left with deficiencies relative to each tractor of $25,177.37, $26,677.37, and
$25,177.38, respectively.
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These figures reflect the “deficiency amounts” declared by Navistar following the sale of each
repossessed piece of equipment. (See, e.g., First Am. Compl., Ex. D (1/13/10 Letters to CCC
Trucking and Cunningham).) Although not stated by Navistar in its Motion or supporting
materials, these deficiencies total $192,893.43. It is not clear whether the deficiency amounts
included then-accrued interest.
Based on the undisputed facts, Navistar contends that it is entitled to judgment as a
matter of law. Navistar demands “interest,” attorneys’ fees, and costs, in addition to recovery of
the “deficiency amounts.” With respect to its demand for “interest,” Navistar has not specified
whether it seeks prejudgment interest and/or postjudgment interest. As to prejudgment interest,
Navistar has not demanded any particular sum, nor has it identified the applicable interest rate or
the principal basis for any interest calculation.
STANDARD OF REVIEW
Rule 56 requires the court to grant a motion for summary judgment 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.” Fed. R. Civ. P. 56(a) (2011). If a moving defendant shows that there is no
genuine issue of material fact as to at least one essential element of the plaintiff’s claim, the
burden shifts to the plaintiff to provide evidence beyond the pleadings “set[ting] forth specific
facts showing that there is a genuine issue for trial.” Moldowan v. City of Warren, 578 F.3d 351,
374 (6th Cir. 2009); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91
L. Ed. 2d 265 (1986). “In evaluating the evidence, the court must draw all inferences in the light
most favorable to the [plaintiff].” Moldowan, 578 F.3d at 374.
At this stage, “‘the judge’s function is not . . . to weigh the evidence and determine the

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truth of the matter, but to determine whether there is a genuine issue for trial.’” Id. (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)).
But “the mere existence of a scintilla of evidence in support of the plaintiff’s position will be
insufficient,” and the plaintiff’s proof must be more than “merely colorable.” Anderson, 477
U.S. at 249, 252. An issue of fact is “genuine” only if a reasonable jury could find for the
plaintiff. Moldowan, 578 F.3d at 374 (citing Matsushita, 475 U.S. at 587).

ANALYSIS
I.

Liability
The Loan Agreements and the Guaranty are both governed by Illinois law. Under Illinois

law, the elements of a breach of contract claim are: (1) the existence of a valid and enforceable
contract; (2) performance by the plaintiff; (3) breach of contract by the defendant; (4) resultant
injury to the plaintiff. Henderson-Smith & Assocs., Inc. v. Nahamani Family Serv. Ctr., Inc.,
752 N.E. 2d 33, 43 (Ill. App. Ct. 2001). A guaranty is a valid and enforceable contract within
Illinois. See McLean Cnty. Bank v. Brokaw, 519 N.E.2d 452, 456 (Ill. 1988); Heritage Bank of
Univ. Park v. Bruti, 489 N.E.2d 1182, 1183 (Ill. App. Ct. 1986). The rules of construction of
contracts apply generally to contracts of guaranty. McLean, 519 N.E.2d at 456. A guarantor is
to be accorded the benefit of any doubt which may arise from the language of the contract, and
his liability is not to be varied or extended by construction or implication beyond its precise
terms. Id. On the other hand, where the language of a guaranty is unambiguous, it must be
given its natural and ordinary meaning as with any other contract. Heritage, 489 N.E.2d at 1183;
McLean, 519 N.E.2d at 465.
The undisputed facts establish that Navistar is entitled to summary judgment on its

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breach of contract claims against both defendants. The Loan Agreements and the Guaranty are
both valid and enforceable contracts, and the terms of the Guaranty are unambiguous. Navistar
performed its obligations under those agreements. With respect to the Loan Agreements, CCC
Trucking breached its promise to make monthly installment payments in return for Navistar’s
financing the purchase of the underlying equipment; with respect to the Guaranty, Cunningham
breached his promise to meet CCC Trucking’s obligations under the Loan Agreements. Navistar
suffered at least $192,893.43 in damages from the defendants’ contractual breaches.
Both defendants are liable for accrued interest. Furthermore, because the defendants
breached their agreements and Navistar brought this meritorious action to collect payments due
thereunder, the defendants are also liable to Navistar for its costs of collection, including
reasonable attorneys’ fees.
II.

Damages
Although judgment in Navistar’s favor is plainly warranted, the court requires additional

information from Navistar concerning its interest demand. “In diversity cases in this Circuit,
federal law controls post-judgment interest but state law governs prejudgment interest.” Estate
of Riddle ex rel. Riddle v. S. Farm Bureau Life Ins. Co., 421 F.3d 400 (6th Cir. 2005).
Accordingly, Navistar must:
(1)

Specify the nature of its demand for interest;

(2)

To the extent it demands contractual/prejudgment interest, specify the
applicable interest rate by reference to supporting legal authority
(presumably under Illinois law) and identify the principal amount to which
that rate should apply; and

(3)

Provide a sworn calculation of the total interest owed, including itemized
calculations as to each Loan Agreement with supporting documentation.

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The court will defer entering a final order on the Motion for Summary Judgment pending receipt
and review of the requested information.5
CONCLUSION
For the reasons set forth herein, Navistar is ORDERED to file the submissions discussed
in this order on or before April 2, 2012.
It is so ordered.
_______________________________
ALETA A. TRAUGER
United States District Judge

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With respect to an award of attorney’s fees and other collection costs, the court
anticipates that, once judgment enters in Navistar’s favor, Navistar will properly account for
those fees and costs by motion in accordance with Fed. R. Civ. P. 54(d).
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