Federal Deposit Insurance Corporation v. Phoenix Phones et al
Filing
24
MEMORANDUM DECISION AND ORDER granting 17 Motion for Summary Judgment. Judgment shall enter in favor of Plaintiff and against Defendants, jointly and severally, in the amount of $2,851,330.30, plus reasonable attorneys' fees and costs. Signed by Judge Ted Stewart on 5/9/2011. (las)
IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
NORTHERN DIVISION
FEDERAL DEPOSIT INSURANCE
CORP., as receiver for Barnes Banking
Co.,
Plaintiff,
MEMORANDUM DECISION AND
ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY
JUDGMENT
vs.
PHOENIX PHONES and MICHAEL R.
NEBEKER,
Case No. 1:10-CV-76 TS
Defendants.
I. INTRODUCTION
Plaintiff, the Federal Deposit Insurance Corporation (FDIC) moves for summary
judgment against Defendants Phoenix Phones (Phoenix) and Michael R. Nebeker
(Nebeker). Defendants have filed no opposition. The Court grants summary judgment.
II. SUMMARY JUDGMENT STANDARD
As the Tenth Circuit has explained:
Summary judgment is appropriate “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.” A dispute is genuine “if there is sufficient
1
evidence so that a rational trier of fact could resolve the issue either way.” A
fact is material “if under the substantive law it is essential to the proper
disposition of the claim.”1
If, as in the present case, “the nonmoving party fails to respond,” the court “may not
grant the motion without first examining the moving party's submission to determine if it has
met its initial burden of demonstrating that no material issues of fact remain for trial and
the moving party is entitled to judgment as a matter of law. If it has not, summary judgment
is not appropriate, for "’no defense to an insufficient showing is required.’"2
III. FINDINGS OF UNDISPUTED FACTS
This case was removed from state court on May 14, 2010. There was some
question regarding the content of record on removal,3 which was resolved with the filing of
the notice of the state court docket on March 31, 2011.4 Plaintiff has submitted a detailed
statement of material facts as to which it contends no genuine dispute of facts exist.
Defendant has submitted nothing to controvert those facts. Thus, they are established for
the purpose of this Motion. Those facts, quoted from movant’s statement of facts5 are as
1
Crowe v. ADT Sec. Services, Inc., __ F.3d __, ___ 2011 WL 1532536, at *3
(10th Cir. 2011) (quoting Fed.R.Civ.P. 56(a); Adler v. Wal–Mart Stores, Inc., 144 F.3d
664, 670 (10th Cir. 1998)). .
2
Reed v. Bennett, 312 F.3d 1190, 1194-95 (10th Cir. 2002) (quoting Adickes v.
S.H. Kress & Co., 398 U.S. 144, 160-61 (1970) (alternation omitted)).
3
See Docket Nos. 14 and 16.
4
Docket No. 23.
5
Docket No. 18, at 2-7; See DuCivR 56(c) (providing that “[a]ll material facts of
record meeting the requirements of Fed. R. Civ. P. 56 that are set forth with particularity
in the statement of the movant will be deemed admitted for the purpose of summary
judgment, unless specifically controverted by the statement of the opposing party
2
follows:
On or about December 30, 2002, Barnes Bank made a loan to Phoenix, in the
original principal amount of $2,278,861 (the Loan). As part of the Loan, Phoenix executed
and delivered to Barnes Bank a Promissory Note, dated December 30, 2002, in the original
note amount of$2,278,861 (the Note), in which Phoenix promised repayment of the Loan,
including all principal, accrued interest, collection costs, and late charges.
Phoenix subsequently executed and delivered to Barnes Bank eight Change in
Terms Agreements (Change Agreements) relating to the Note, which extended the maturity
date upon which the entire indebtedness under the Loan and Note was due,
ultimately and finally to December 27,2006 (Maturity).
Nebeker executed and delivered to Barnes Bank nine Commercial Guaranties
(Guaranties) guaranteeing "payment of the Note"and "full and punctual payment and
satisfaction of the Indebtedness of [Phoenix], and the performance and discharge of all
[Phoenix's] obligations under the Note and Related Documents."6
Pursuant to the Note, and prior to any default, interest accrued on the principal
amount of the Loan at a variable rate equal to the New York Prime Rate published in the
Wall Street Journal plus 2.00% per annum, adjusted not more often than each day (the
"Note Rate").
Throughout the course of the Loan, several payments were made and interest
identifying material facts of record meeting the requirements of Fed. R. Civ. P. 56”).
6
Docket No. 18, Garner Aff., Ex. C.
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accrued at the Note Rate. The Stock collateral was sold, and on September 14, 2004
proceeds in the amount of $800.00 and $40,553.02 were applied, as a late charge and
interest payment respectively, to the Loan, which had an unpaid principal balance of
$2,159,215.75. The remaining proceeds from the sale of the Stock collateral, in the
amount of $1,034,172.86, were applied to the Second Loan.
The Box Elder County Property collateral was sold, and on October 31, 2005
proceeds from the sale in the amount of $200,714.96 were applied to the Loan, reducing
the unpaid principal balance to $1,958,500.79.
The Davis County Property collateral was sold, and on September 26, 2006
proceeds from the sale in the amount of $594,941.30 were applied to the Loan, reducing
the unpaid principal balance to $1,363,559.49.
On December 12, 2006, a principal advance in the amount of $72,372.05 was taken
on the Loan, which increased the principal balance to $1,435,931.54 (the "Unpaid
Principal Balance").
Pursuant to and following the sale of the Davis County and Box Elder County
Properties, Trust Deed #1 and Trust Deed #2 were reconveyed. Pursuant to the Note and
Change Agreements, interest on the unpaid principal balance of the Loan accrued at the
Note Rate of 6.00% until the final Maturity date of December 27, 2006.
The total amount of unpaid non-default interest that accrued on the principal
balance of the Loan at the Note Rate until the final Maturity date of December 27, 2006,
is $270,954.70.
On the December 27, 2006 final Maturity date, Defendants Phoenix and Nebeker
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did not pay to Barnes Bank all or any of the total indebtedness then due and owing under
the Note, Loan and Loan Documents, which included the unpaid principal balance in the
amount of $1,435,931.54 and the Unpaid Note Rate Interest in the amount of $270,954.70.
Barnes Bank sent regular Loan statements to Phoenix throughout the course of the
Loan. Phoenix and Nebeker have not made any payments on the Loan since the
December 27, 2006 final Maturity date.
As a result of the sale of the Box Elder Property, the Davis County Property and the
Stock, Barnes Bank's security interest in the collateral has been exhausted.
Pursuant to the Note and Loan Documents, the Note and Loan are in default if
Defendants fail to make any payment when due, including for outstanding unpaid principal
balance, accrued interest, unpaid collection costs, and any late charges.
Barnes Bank has notified Phoenix and Nebeker of their defaults under the Note
and Loan Documents and that Barnes Bank demands payment, but Phoenix and Nebeker
have not cured their defaults and have not paid the entire indebtedness due under the
Note and Loan.
Pursuant to the Note and Change Agreements, upon any default in payment of the
Loan, Defendants agreed to pay interest on the entire unpaid principal balance at a rate
of 18.00% per annum. Since the December 27,2006 final Maturity date, when the total
indebtedness due on the Loan was not paid in full, interest has been accruing on the Loan
at the default rate of 18.00% per annum.
From December 27, 2006 through August 5, 2009, the total amount of unpaid
default rate interest that has accrued on the Unpaid Principal Balance is $1,144,444.10
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(1594 days at $717.97 per diem).
As of May 9, 2011, the entire unpaid indebtedness under the Loan totals
$2,851,330.03, which includes the Unpaid Principal Balance in the amount of
$1,435,931.54, the Unpaid Note Rate Interest (through final maturity date of 12/27/06) in
the amount of $270,954.70, and the Unpaid Default Interest in the current amount of
$1,144,444.10 (the Default Rate of 18% per annum from 12/27/06 through 5/9/11 or 1594
days at $717.97 per diem), for a total of $2,851,330.30. After entry of judgment, the
federal post-judgment interest rate shall apply.7
Further, pursuant to the Note, Change Agreements, Guaranties, and Loan
Documents, upon any default thereunder, Barnes Bank is entitled to recover its reasonable
attorney's fees and costs incurred.
IV. CONCLUSIONS AND ORDER
Plaintiff has shown that there are no genuine disputes of fact and on the undisputed
facts that it is entitled to judgment as a matter of law on the defaulted note. Plaintiff has
shown that the liability on the notes is joint and several. Plaintiff has also shown that it is
entitled to past interest and reasonable attorney fees and costs.
Accordingly, the Court grants Plaintiff’s Motion for Summary Judgment and
judgment will enter against Defendants, jointly and severally, for the amounts due and
owing on the Loan totaling $2,851,330.30, plus Plaintiffs attorney's fees and costs incurred.
It is therefore
7
28 U.S.C. § 1961.
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ORDERED that Plaintiff’s Motion for Summary Judgment (Docket No. 17) is
GRANTED and judgment shall enter in favor of Plaintiff and against Defendants, jointly and
severally, in the amount of $2,851,330.30, plus reasonable attorneys’ fees and costs.
DATED May 9, 2011.
BY THE COURT:
_____________________________________
TED STEWART
Chief United States District Judge
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