BANK v. WAXMAN
| Decision Date | 06 July 2010 |
| Docket Number | Civil Action No. 5:09-cv-00033-KKC. |
| Citation | 726 F.Supp.2d 742 |
| Parties | FIFTH THIRD BANK, Plaintiff v. Robert K. WAXMAN, Vandalay Racing, LLC and Debra Waxman, Defendants. |
| Court | U.S. District Court — Eastern District of Kentucky |
726 F.Supp.2d 742
FIFTH THIRD BANK, Plaintiff
v.
Robert K. WAXMAN, Vandalay Racing, LLC and Debra Waxman, Defendants.
Civil Action No. 5:09-cv-00033-KKC.
United States District Court,
E.D. Kentucky,
Central Division,
at Lexington.
July 6, 2010.
COPYRIGHT MATERIAL OMITTED.
Adrian M. Mendiondo, Benjamin L. Kessinger, III, Kinkead & Stilz, PLLC, Lexington, KY, for Plaintiff.
Medrith Lee Norman, Frost Brown Todd LLC, Lexington, KY, for Defendants.
This matter is before the Court on the Motion for Partial Summary Judgment filed by Plaintiff Fifth Third Bank (“Fifth Third”). Rec. 34. This case stems from several loans Fifth Third made to Robert Waxman and Vandalay Racing, LLC (“Vandalay”) which Fifth Third claims are in default. These loans were guaranteed by Robert Waxman, Debra Waxman and Vandalay (collectively “Defendants”). Defendants have filed a response in opposition to the motion for partial summary judgment and Fifth Third has submitted a reply in further support of its motion. Rec. 39, 48. Because this matter has been fully briefed, it is ripe for decision. For the reasons set forth below, the Court will grant Fifth Third's motion for partial summary judgment.
I. FACTUAL BACKGROUND
Fifth Third is a Michigan banking corporation and is the holder and owner of the notes and loans made to Defendants. Rec. 7, Amended Complaint at ¶ 1. Robert Waxman is a resident of Ontario, Canada and has conducted business in Kentucky including entering into a loan agreement with Fifth Third at issue in this action. Id. at ¶ 2. Debra Waxman is also a resident of Ontario, Canada and is married to Robert. Id. at ¶ 4. Along with her husband, Robert, Debra Waxman has engaged in business in Kentucky. Her business transactions include providing personal guarantees to several loans made by Fifth Third to Vandalay. Id. Vandalay is a Kentucky limited liability company with its principal place of business in Ontario, Canada. Id. at ¶ 3. Daniel Waxman is Robert and Debra Waxman's son and the sole member of Vandalay. Both Robert Waxman and Vandalay are in the horse business.
A. The Loans 1. Loan Number 0904216991-26
Fifth Third made four loans to the Defendants that are at issue in this action. The first loan, in the amount of $1,250,000.00, was made to Robert Waxman and guaranteed by Vandalay. Robert Waxman entered into a Revolving Note agreement and an Amended and Restated Loan and Security Agreement with Fifth Third on July 1, 2006. Rec. 34, Exh. 1 Revolving Note and Exh. 2 Amended Security Agreement. On the same day, Vandalay executed and delivered a guaranty for the loan to Fifth Third. Rec. 34, Exh. 4, Vandalay Guaranty. On September 1, 2007, Robert Waxman and Fifth Third entered into an Amendment to the Revolving Note extending the maturity date of the loan to February 1, 2008. Rec. 34, Exh. 3 Amendment to Revolving Note. On March
24, 2008, Fifth Third again extended the maturity date of the loan to May 1, 2008. During the course of his deposition, Robert Waxman acknowledged that he signed all of the aforementioned agreements. Rec. 49, Robert Waxman Depo. at 33-38. He also acknowledged that he defaulted on the loan and failed to make required payments. Id. at 57-58. During Daniel Waxman's deposition, he acknowledged that Vandalay failed to make the payments required under the terms of the guaranty after Robert Waxman defaulted on the loan. Rec. 49, Daniel Waxman Depo. at 21-22.
2. Loan Number 0905312609-26
On September 25, 2007, Vandalay entered into a Revolving Note agreement and an Amended and Restated Loan and Security Agreement with Fifth Third for a $750,000.00 loan. Rec. 34, Exh. 5 Revolving Note Agreement and Exh. 6 Amended Security Agreement. Debra Waxman executed and delivered a guaranty to Fifth Third for this loan. Rec. 34, Exh. 7 Guaranty. Daniel Waxman acknowledges that Vandalay failed to timely make the required loan payments and that the loan became delinquent. Rec. 49, Daniel Waxman Depo. at 21-22. While being deposed, Debra Waxman acknowledged that she executed the guaranty in question and failed to make timely payments on the guaranty. Rec. 49, Debra Waxman Depo. at 7-9, 11-13.
3. Loan Number 0905312609-42
On April 1, 2007, Vandalay entered into a Term Note agreement and an Amended and Restated Loan and Security Agreement with Fifth Third for a $200,000.00 loan. Rec. 34, Exh. 8 Term Note and Exh. 9 Amended Security Agreement. Daniel Waxman acknowledges that he entered into this agreement. Rec. 49, Daniel Waxman Depo. at 19. Debra Waxman also executed and delivered a guaranty on this loan. Rec. 34, Exh. 10, Guaranty. It is undisputed that Vandalay failed to make timely payments on the loan. Rec. 49, Daniel Waxman Dep. at 21-22. Furthermore, Debra Waxman has admitted that she received a demand for payment from Fifth Third and failed to make timely payments on the guaranty. Rec. 49, Debra Waxman Dep. at 11-13.
4. Loan Number 0905312609-67
On January 2, 2008, Vandalay entered into a Revolving Note agreement and an Amended and Restated Loan and Security Agreement with Fifth Third for a $150,000.00 loan. Rec. 34, Exh. 11 Revolving Note Agreement and Exh. 12 Amended Security Agreement. Daniel Waxman acknowledges that he entered into the agreement and executed the relevant documents. Rec. 49, Daniel Waxman Dep. at 20-21. Debra Waxman executed and delivered a guaranty on this loan to Fifth Third. Rec. 34, Exh. 13 Guaranty. There is no dispute that Vandalay failed to make timely payments on the loan and that the loan entered default. Rec. 49, Daniel Waxman Dep. at 22. Debra Waxman acknowledges that when called upon to make payment under the terms of the guaranty, she failed to do so. Rec. 49, Debra Waxman Dep. at 11-13.
B. Fifth Third's Motion for Partial Summary Judgment
Fifth Third asserts that it is entitled to summary judgment as a matter of law regarding the loan defaults because there is no genuine factual dispute that Defendants have breached their contractual obligations under the loan agreements. Rec. 34 at 9. Defendants have not disputed the amounts that are due and owing, challenged the validity of the loan documents, or filed any counterclaims. As to all guaranties, both Debra Waxman and Vandalay
have acknowledged entering into the guaranties and failing to make the required payments. Id. Accordingly, Fifth Third asks this Court to enter summary judgment as to the amounts due on the loans and for an award of attorneys' fees, costs and expenses related to the collection of the loans as provided for in the loan agreements. Id. However, Fifth third requests that the Court reserve determination of the exact amount of the costs until after partial summary judgment is entered. 1
Defendants contend that summary judgment is not appropriate and allege that Fifth Third is guilty of repeated misrepresentations including various breaches of fiduciary duties. Defendants further allege that the loans at issue only entered default because Fifth Third promised Robert Waxman that he could reinvest certain horse racing earnings into his business. Defendants claim that Robert Waxman relied on this promise in purchasing several yearlings for his business, only to have Fifth Third renege on its promise by applying the funds to pay down his outstanding loans. Robert Waxman claims that the litigation that resulted from his inability to pay for these yearlings ruined his business and negated his ability to repay his loans. Defendants also accuse Fifth Third of dragging Vandalay and Debra into a messy situation which Fifth Third's wrongful conduct created.
Defendants assert that summary judgment is improper as to Fifth Third's claims against Robert Waxman because of the bank's misrepresentations to him. Defendants further claim that because Fifth Third breached its fiduciary duties and the duties of good faith and fair dealing, any subsequent breach by Defendants should be excused. Defendants also assert that recovery is barred by the doctrine of unclean hands and failure to mitigate. As to Debra Waxman, Defendants assert that Fifth Third breached an overarching agreement between the parties that Debra's guaranties would never be enforced. On this basis, Defendants assert that the guaranties were fraudulently induced. Finally, with regard to Vandalay, Defendants assert that summary judgment is precluded by Fifth Third's failure to mitigate its damages.
II. SUMMARY JUDGMENT STANDARD
Under Federal Rule of Civil Procedure (“FRCP”) 56, summary judgment is appropriate where “the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). Initially, the burden is on the moving party to inform the district court of the basis for its motion and identify those portions of “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any,” which demonstrate the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This burden may be met by the moving party by demonstrating the absence of evidence supporting any one or more of the essential elements of the non-moving party's claim. Id. at 322-25, 106 S.Ct. 2548. Once this initial burden has been met, the non-moving party must present specific facts showing that there is
a genuine issue for trial. See Fed.R.Civ.P. 56(e).
A party opposing a motion for summary judgment cannot “simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A scintilla of evidence in support of the...
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