Cobin v. Rice, Civ. No. F 91-86.

CourtUnited States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
Writing for the CourtWILLIAM C. LEE
Citation823 F. Supp. 1419
PartiesSteven M. COBIN, Trustee of The Cobin Family Trust, Harold J. Belkin, Trustee of The Belkin Family Trust and Marsha Hendler, Plaintiffs, v. Donald G. RICE, Jr., Defendant.
Docket NumberCiv. No. F 91-86.
Decision Date05 May 1993

823 F. Supp. 1419

Steven M. COBIN, Trustee of The Cobin Family Trust, Harold J. Belkin, Trustee of The Belkin Family Trust and Marsha Hendler, Plaintiffs,
Donald G. RICE, Jr., Defendant.

Civ. No. F 91-86.

United States District Court, N.D. Indiana, Fort Wayne Division.

May 5, 1993.

823 F. Supp. 1420
823 F. Supp. 1421
823 F. Supp. 1422
John F. Lyons, Alan Ver Planck, Fort Wayne, IN, for plaintiffs

Robert Owen Vegeler, Beers, Mallers, Backs & Salin, Fort Wayne, IN, for defendant.


WILLIAM C. LEE, District Judge.

This matter is before the court on four motions for partial summary judgment filed by the plaintiffs, on a motion to strike affidavit, also filed by the plaintiffs, and on a cross-motion for partial summary judgment filed by the defendant.

Summary Judgment

Summary judgment is proper "if 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 a judgment as a matter of law." Fed.R.Civ.P. 56(c). However, Rule 56(c) is not a requirement that the moving party negate his opponent's claim. Fitzpatrick v. Catholic Bishop of Chicago, 916 F.2d 1254, 1256 (7th Cir.1990). Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery, against a party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and in which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The standard for granting summary judgment mirrors the directed verdict standard under Rule 50(a), which requires the court to grant a directed verdict where there can be but one reasonable conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). A scintilla of evidence in support of the non-moving party's position is not sufficient to successfully oppose summary judgment; "there must be evidence on which the jury could reasonably find for the plaintiff." Id. 477 U.S. at 252, 106 S.Ct. at 2512; In Re Matter of Wildman, 859 F.2d 553, 557 (7th Cir.1988); Klein v. Ryan, 847 F.2d 368, 374 (7th Cir.1988); Valentine v. Joliet Township High School District No. 204, 802 F.2d 981, 986 (7th Cir.1986). No genuine issue for trial exists "where the record as a whole could not lead a rational trier of fact to find for the nonmoving party." Juarez v. Ameritech Mobile Communications, Inc., 957 F.2d 317, 322 (7th Cir.1992) (quoting Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)).

Initially, Rule 56 requires the moving party to inform the court of the basis for the motion, and to identify those portions of the "pleadings, depositions, answers to interrogatories, and admission on file, together with the affidavits, if any," which demonstrate the absence of a genuine issue of material fact, Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. The non-moving party may oppose the motion with any of the evidentiary materials listed in Rule 56(c), but reliance on the pleadings alone is not sufficient to withstand summary

823 F. Supp. 1423
judgment. Goka v. Bobbitt, 862 F.2d 646, 649 (7th Cir.1988); Guenin v. Sendra Corp., 700 F.Supp. 973, 974 (N.D.Ind.1988); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). In ruling on a summary judgment motion the court accepts as true the non-moving party's evidence, draws all legitimate inferences in favor of the non-moving party, and does not weigh the evidence or the credibility of witnesses. Anderson, 477 U.S. at 249-251, 106 S.Ct. at 2511. However, "it is a gratuitous cruelty to parties and their witnesses to put them through the emotional ordeal of a trial when the outcome is foreordained" and in such cases summary judgment is appropriate. Mason v. Continental Illinois Nat'l Bank, 704 F.2d 361, 367 (7th Cir.1983)

Substantive law determines which facts are material; that is, which facts might affect the outcome of the suit under the governing law. Id. 477 U.S. at 248, 106 S.Ct. at 2510. Irrelevant or unnecessary facts do not preclude summary judgment even when they are in dispute. Id. The issue of fact must be genuine. Fed.R.Civ.P. 56(c), (e). To establish a genuine issue of fact, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. at 1356; First National Bank of Cicero v. Lewco Securities Corp., 860 F.2d 1407, 1411 (7th Cir.1988). The non-moving party must come forward with specific facts showing that there is a genuine issue for trial. Id. A summary judgment determination is essentially an inquiry as to "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-252, 106 S.Ct. at 2512.

A. Motion for Partial Summary Judgment Declaring Oaklawn Partnership Dissolved1

The Oaklawn Courts Partnership ("the Partnership") operates an apartment complex in Fort Wayne, Indiana. The real estate is commonly known as "Oaklawn Courts Apartments" ("Oaklawn Courts"), and consists of approximately 330 apartments. The Partnership was formed under the laws of the State of California on February 21, 1985 between plaintiff Cobin, Trustee of the Cobin Family Trust, plaintiff Belkin, Trustee of the Belkin Family Trust and defendant Rice. Plaintiff Hendler has an interest in the Partnership by reason of her former marriage to Belkin.

The principal capitalization of Oaklawn Courts came via the creditworthiness of Cobin and Belkin. The initial assets of the Partnership were acquired through interim financing. The interim financing was procured through Merchants National Bank and Trust Company ("Merchants"). Merchants demanded and received personal guarantees from each of the partners, including Rice. Cobin was designated as the managing partner of the Partnership and Rice was designated as the property manager of Oaklawn Courts.

In March of 1987, the principals of the Partnership entered into a financing arrangement with Merchants. This financing arrangement expired on April 1, 1990. After the expiration of the financing arrangement, the Partnership continued to pay Merchants the same amount per month as it had been paying prior to the expiration of the financing arrangement, together with taxes and insurance on the subject property.

On or about January 4, 1991, Merchants informed the principals of the Partnership that it would require a renewal of the previously expired loan, as well as personal guarantees from each of the partners in order to extend further credit and to renew the obligations existing between the Partnership and Merchants. On January 21, 1991, pursuant to written agreement of those partners of the Partnership holding at least fifty-one percent

823 F. Supp. 1424
interest, it was determined that the renewal of the mortgage indebtedness was necessary in order to continue the ongoing operations of the Partnership, and that the current capital of the Partnership was insufficient for that purpose. Pursuant to paragraph 7 of the Partnership Agreement2, each partner was asked to make a cash contribution either in cash or in the form of a clean letter of credit suitable for tender to Merchants for approval. This cash call was in the form of a written letter, dated January 21, 1991, from Attorney John Lyons to Messrs. Belkin, Cobin and Rice and Ms. Hendler

In contravention of his obligations as a general partner of the Partnership, Rice refused to participate in the cash contribution either by submitting cash or a clean letter of credit. Rice also refused to lend any further credit to the business of the Partnership and also failed to meet his obligation to cover monthly ongoing operational shortfalls of Oaklawn. As a result, Merchants threatened to initiate foreclosure proceedings unless the remaining partners, the plaintiffs herein, came forward and assumed the full financial burden of refinancing the Partnership indebtedness. Plaintiffs Cobin, Belkin, and Hendler paid defendant Rice's one-third share of the refinancing obligation, in order to prevent foreclosure.

On April 11, 1991, the plaintiffs filed an action against Rice requesting that the court order dissolution of the Partnership, and order an accounting in order to wind up the business of the Partnership and to enable the plaintiffs to ascertain the exact nature and amount of damages due them from defendant. Plaintiffs further request that they be allowed to continue in the Partnership under the name and style "Oaklawn Courts Partnership," but without the participation of defendant Rice. Defendant filed a counterclaim on May 30, 1991 alleging, inter alia, that the plaintiffs breached the Partnership Agreement in several respects. On August 12, 1991 this court granted Rice's motion to add causes of action and parties and on December 19, 1991, this court granted plaintiffs' motion to add causes of action and parties. Also on December 19, 1991, this court consolidated Civil Action No. F88-37, Casselwood Partnership v. Donald G. Rice, Jr., with the present case. Plaintiffs filed the present motion for partial summary judgment on January 11, 1993, requesting summary judgment on their complaint.

In support of this motion, plaintiffs allege that Rice's actions in refusing to cooperate in the renewal of the Partnership's financing constitute wrongful material breaches of the Partnership Agreement, or at least constitute conduct that makes the continuation of the Partnership with Rice as a partner impracticable, thereby giving the plaintiffs a right to...

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