Congress Fin. Corp. v. COMMERCIAL TECH.

• Decision Date: 22 February 1995
• Docket Number: Civil No. 1:93-CV-1522-JEC.
• Citation: Congress Fin. Corp. v. COMMERCIAL TECH., 910 F.Supp. 637 (N.D. Ga. 1995)
• Parties: CONGRESS FINANCIAL CORPORATION (SOUTHERN), Plaintiff, v. COMMERCIAL TECHNOLOGY, INC., Superior Technology, Inc., and Joseph H. Sitkin, Defendant.
• Court: U.S. District Court — Northern District of Georgia

910 F. Supp. 637

CONGRESS FINANCIAL CORPORATION (SOUTHERN), Plaintiff, v. COMMERCIAL TECHNOLOGY, INC., Superior Technology, Inc., and Joseph H. Sitkin, Defendant.

Civil No. 1:93-CV-1522-JEC.

United States District Court, N.D. Georgia, Atlanta Division.

February 22, 1995.

COPYRIGHT MATERIAL OMITTED

J. Marbury Rainer, David N. Heaton, Parker, Hudson, Rainer & Dobbs, Atlanta, GA, for plaintiff.

Joe B. Abbey, Office of Joe B. Abbey, Dallas, TX, for defendant.

ORDER

CARNES, District Judge.

This case is presently before the Court on Plaintiff's Motion for Summary Judgment 18 and Defendants' Commercial Technology, Inc. and Superior Technology, Inc. Motion for Summary Judgment 19. The Court has reviewed the record and the arguments of the parties and, for the reasons set out below, concludes that Plaintiff's Motion for Summary Judgment is granted and Defendants' Motion for Summary Judgment is denied.

BACKGROUND

This case involves a suit for breach of contract, specifically three guarantees. Plaintiff Congress Financial Corporation (Southern), (hereinafter "Congress") entered into a revolving credit facility with American Brass, Inc., an Alabama corporation (hereinafter "ABI"). (Compl. at Ex. A.) On July 19, 1993, to secure its indebtedness, ABI granted Congress a security interest in all or substantially all of ABI's personal property. (Id. at Ex. A at Sec. 4.) The agreement was signed for ABI by defendant Joseph H. Sitkin, President. (Id. at Ex. A at 5.)

In addition to the ABI collateral, Congress obtained further security prior to making any loans to ABI — the unconditional guaranty of ABI's obligations by defendants Commercial Technology, Inc. (hereinafter "Commercial"), Superior Technology, Inc. (hereinafter "Superior"), and Joseph H. Sitkin. Thus, also on July 19, 1989, Commercial, Superior and Sitkin each executed a "Guarantee and Waiver" with Congress. (Compl. at Ex. B, C and D.) The Commercial and Superior guarantees were executed by S. Mort Zimmerman. Zimmerman executed the Commercial Guarantee as president of Commercial. (Id. at Ex. B.) Zimmerman executed the Superior Guarantee as the chairman of Superior's board of directors. (Id. at Ex. C.)

Zimmerman was also a director of ABI. (Pl.Mot. for Sum.J. 18 at Ex. 2, Def.Response to Inter. at ¶ 3.) Superior owns 80% of ABI's outstanding stock. (Aff. of McCarthy, at ¶ 2.)¹ Sitkin owns the other 20% of ABI's outstanding stock. (Id.) Superior, in turn, is owned entirely by Electric Gas & Technology, Inc., of which Zimmerman is also president. (Id. at ¶ 5.)

Congress made numerous loan advances to ABI. ABI ultimately defaulted under its obligations to Congress. Following ABI's default, representatives of Congress had several discussions with Zimmerman about selling some of Congress' collateral remaining at the ABI plant. (Id. at ¶ 7.) The parties agreed that the sale should be processed through a liquidation assistance firm, ATEC Incorporated. (Aff of McCarthy, at ¶ 9.) Zimmerman, as chairman of ABI's board of director's, agreed to sell the collateral in accordance with the ATEC proposal and added some additional conditions. (Id. at ¶ 9, Ex. F1, F2.) In his affidavit, McCarthy states that, to the best of his knowledge, this sale proceeded in accordance with the additional conditions implemented by Zimmerman, the representative of ABI, Commercial and Superior. Congress ultimately received the net proceeds of the sale as proceeds of Congress' collateral. (Id. at ¶ 9.)

In addition, Zimmerman discussed with Congress a possible sale of certain "ball mill residue" belonging to ABI and included in Congress' collateral. (Id. at ¶¶ 8, 10.) The sale of this property was arranged by Trans Metals, Inc. ("Trans Metals"). (Id. at ¶ 10.) Trans Metals is an affiliate of ABI and Zimmerman. (Id. at ¶ 10, Ex. H1.) Congress has no relationship with Trans Metals. (Aff. of McCarthy, at ¶ 10.)

ABI or Trans Metals then proceeded to sell ball mill residue in the spring of 1993 in one or two transactions. (Id. at ¶ 10.) Trans Metals, then remitted to Congress a portion of the proceeds paid by the buyer. (Id.) These checks were drawn on a Trans Metals bank account. (Id. at Ex. G.)

On or about June 16, 1993, Congress made written demand on Commercial and Superior to honor their respective obligations under the guarantees. (Id. at ¶ 6.) Both Commercial and Superior have refused to pay. (Id.) On July 2, 1993, Congress filed suit against Commercial, Superior and Sitkin and requested judgment for the amount of the indebtedness of ABI (at that time it was in excess of $1,354,232.22), plus interest, costs and expenses, including reasonable attorneys' fees incurred in collecting the indebtedness.² Plaintiff and defendant Sitkin moved for entry of a consent judgment. On August 17, 1993, this Court granted their motion and entered a Consent Order Granting the Joint Motion for Entry of Consent Judgment as to defendant Sitkin.

Thus far, Congress has not foreclosed on nor taken possession of the ABI property securing ABI's debt to Congress. (Aff. of McCarthy, at ¶ 12.) On May 25, 1994, plaintiff Congress moved for summary judgment. On June 17, 1994, defendants Commercial and Superior moved for summary judgment.

DISCUSSION

I. Summary judgment standard

Summary judgment is not properly viewed as a device that the trial court may, in its discretion, implement in lieu of a trial on the merits. Instead, Rule 56 of the Federal Rules of Civil Procedure mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of every element essential to that party's case on 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, 91 L.Ed.2d 265 (1986). In such a situation, there can be no genuine issue as to any material fact, as a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial. Id. at 322-23, 106 S.Ct. at 2552-53.

The movant bears the initial responsibility of asserting the basis for his motion. Id. at 323, 106 S.Ct. at 2553; Apcoa, Inc. v. Fidelity Nat'l Bank, 906 F.2d 610, 611 (11th Cir.1990). However, the movant is not required to negate his opponent's claim. The movant may discharge his burden by merely "`showing'—that is, pointing out to the district court—that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. at 2554. After the movant has carried his burden, the non-moving party is then required to "go beyond the pleadings" and present competent evidence<sup>3</sup> designating "`specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. at 2553 (quoting FED.R.CIV.P. 56(e)). While the court is to view all evidence and factual inferences in a light most favorable to the nonmoving party, Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir.1988), "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986).

A fact is material when it is identified as such by the controlling substantive law. Id. at 248, 106 S.Ct. at 2510. An issue is genuine when the evidence is such that a reasonable jury could return a verdict for the nonmovant. Id. at 249-50, 106 S.Ct. at 2510-11. The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts.... Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986) (citations omitted). An issue is not genuine if it is unsupported by evidence, or if it is created by evidence that is "merely colorable" or is "not significantly probative." Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2510-11. Thus, to survive a motion for summary judgment, the non-moving party must come forward with specific evidence of every element material to that party's case so as to create a genuine issue for trial.

II. Plaintiff's Motion for Summary Judgment

A. Enforcement of a guaranty is an appropriate case for summary judgment

Congress has moved for summary judgment requesting that this Court enforce the "clear and unambiguous terms of the Commercial Guarantee and the Superior Guarantee." (Pl.Brief in Spt. of Mot. for Sum.J. 18 at 7.) Each instrument provides that "this guarantee and the rights and obligations of Congress and of the undersigned hereunder shall be governed and construed in accordance with the laws of the State of Georgia." (Compl. at Ex. B, C.) In Georgia, the enforcement of unambiguous terms in a written agreement, such as a guaranty, presents an issue of law properly decided by summary judgment. O.C.G.A. § 13-2-1. The Georgia courts have explained that "the process of contract construction ... is composed of three steps." Travelers Ins. Co. v. Blakey, 255 Ga. 699, 700, 342 S.E.2d 308 (1986) (citing Georgia Farm Bureau Mut. Ins. Co. v. Burnett, 167 Ga.App. 480, 306 S.E.2d 734 (1983); Colonial Penn Ins. Co. v. Hart, 162 Ga.App. 333, 291 S.E.2d 410 (1982); and Transamerica Ins. Co. v. Thrift-Mart, Inc., 159 Ga.App. 874, 285 S.E.2d 566 (1981)). The court must first determine whether an ambiguity exists and then attempt to resolve the ambiguity using Georgia's rules of contract construction. Id. (quoting Transamerica, 159 Ga.App. at 880-81, 285 S.E.2d 566). "Contracts, even when ambiguous, are to be construed by the court and no jury question is presented unless after application of applicable rules of construction an ambiguity remains." Id. The third step in the process—jury...