Ford Motor Credit Co. v. Miller

• Decision Date: 21 January 1998
• Docket Number: No. 94-CV-1395.,94-CV-1395.
• Parties: FORD MOTOR CREDIT COMPANY, Plaintiff, v. Donald MILLER, Wendell Miller, and Madeleine Miller, Defendants.
• Court: U.S. District Court — Northern District of New York

Page 107

990 F.Supp. 107

FORD MOTOR CREDIT COMPANY, Plaintiff, v. Donald MILLER, Wendell Miller, and Madeleine Miller, Defendants.

No. 94-CV-1395.

United States District Court, N.D. New York.

January 21, 1998.

Deily, Dautel & Mooney, LLP, Albany, NY (Jonathan D. Deily, Mark D. Glastetter, of counsel), for Plaintiff.

Coughlin & Gerhart, LLP, Binghamton, NY (Peter H. Bouman, of counsel), for Defendants Wendell Miller and Madeline Miller.

Law Offices of John W. Young, Binghamton, NY (John W. Young, of counsel), for Defendant Donald Miller.

MEMORANDUM-DECISION & ORDER

McAVOY, Chief Judge.

Plaintiff Ford Motor Credit Company ("Ford Credit") instituted this diversity action against certain officers, employees and stockholders of Miller Lincoln Mercury, Inc. (the "Dealer"). In brief, Ford Credit seeks to recover upon an unlimited guarantee executed by defendants. Ford Credit also seeks attorneys' fees and costs. Now before the Court is Ford Credit's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.

Defendants, in turn, assert that they have no liability for the Dealer's default. Specifically, defendants contend the Guarantee Agreement is unenforceable, relying on the doctrines of (1) unconscionability and (2) equitable estoppel. Defendants further contend that, in any event, summary judgment cannot be granted on the issue of damages because there exist substantial questions of fact relating to the proper damage amount.

For the reasons set forth below, Ford Credit's motion for summary judgment is granted.

I. BACKGROUND

On June 24, 1982, the defendants¹ executed and delivered to Ford Credit a "Continuing Guarantee" (the "Guarantee"). Pursuant to the Guarantee, each of the defendants jointly and severally agreed to assume any present and future obligations of the Dealer in the event of the Dealer's default.² The Guarantee further provided that it would remain in effect until Ford Credit received written termination of the guarantee by registered mail.

Thereafter, the Dealer became obligated to Ford Credit pursuant to various wholesale plans and other credit facilities. On February 2, 1993, the Dealer defaulted on its obligations to Ford Credit.³

On February 10, 1993, the defendants wrote a letter to Ford Credit, authorizing Ford Credit to take possession of certain items of collateral pursuant to various security agreements. The letter also acknowledged that defendants were guarantors on the indebtedness of the Dealer and that nothing therein modified or discharged their obligations pursuant to the Guarantee.

As a defense to the enforcement of the Guarantee, defendants contend that on July 3, 1990, a Ford Credit employee, Margaret Spadara, advised Donald Miller that no personal guaranties existed. Defendants also contend that they never received copies of the Guarantee and that Ford Credit never mentioned the Guarantee until 1993.

II. DISCUSSION

A. Standard For Summary Judgment

The standard for summary judgment is well-settled. A party seeking summary judgment must demonstrate 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). The moving party bears the initial burden of "informing the ... court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). The initial burden is to demonstrate "that there is an absence of evidence to support the nonmoving party's case." Id. at 325.

The nonmoving party may defeat the summary judgment motion by producing sufficient evidence to establish a genuine issue of material fact for trial. See id. at 322. The test for existence of a genuine dispute is whether a reasonable juror could find for the nonmoving party; that is, whether the nonmovant's case, if proved at trial, would be sufficient to survive a motion for judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In ruling on a motion for summary judgment, a court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Donahue v. Windsor Locks Bd. of Fire Comm'rs., 834 F.2d 54, 57 (2d Cir.1987). The nonmoving party, however, "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Indeed, the nonmoving party's opposition may not rest on mere allegations or denials of the moving party's pleading, but "must set forth specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). "The non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation or conjecture." Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990) (citations and quotations omitted).

It is with the foregoing standards in mind that the Court addresses the issues presented.

B. Defendant Donald Miller

Initially, the Court must address a matter of local procedure relating to defendant Donald Miller ("Donald"). In opposing summary judgment, Donald has submitted only his own affidavit. He did not submit, as required by the Local Rules of the Northern District, either a Rule 7.1(f) statement or a memorandum of law. See Local Rules 7.1(c) & 7.1(f) of the Northern District of New York. Local Rule 7.1(b)(3) provides that in such instances, the party is deemed by the Court to consent to the granting of the motion, unless good cause is shown why these papers were not filed. Because Donald provides no explanation to the Court for his failure to file the required papers, Ford Credit's motion for summary judgment against Donald is granted in its entirety.⁴ See Cossack v. Burns, 970 F.Supp. 108, 111 (N.D.N.Y.1997).

C. Defendants Wendell Miller and Madeleine Miller

It is not disputed that defendants executed a Guarantee to Ford Credit, whereby defendants jointly and severally agreed to assume the obligations of the Dealer in the event of the Dealer's default. The Dealer defaulted on its obligations to Ford Credit in February 1993, and Ford Credit instituted the instant action to recover upon the Guarantee. The question before the Court is thus whether the Guarantee is enforceable.

New York courts recognize the enforceability of guarantee agreements. See, e.g., Apple Bank for Savings v. Aries Striping, Inc., 658 N.Y.S.2d 682, 683 (2d Dep't), modified on other grounds, ___ A.D.2d ___, ___ N.Y.S.2d ___ (2d Dep't 1997); General Elec. Capital Corp. v. A-Drive Corp., 233 A.D.2d 365, 650 N.Y.S.2d 583, 583 (2d Dep't 1996). When, as here, a plaintiff establishes both the existence of a guarantee and the default and nonpayment by the debtor, plaintiff is entitled to judgment. Ihmels v. Kahn, 126 A.D.2d 701, 511 N.Y.S.2d 306 (2d Dep't 1987).

Defendants urge the Court not to enforce the instant Guarantee, however, relying on the doctrines of unconscionability and equitable estoppel as defenses. Neither doctrine applies to this case.

(i) Unconscionability

"[T]he doctrine of unconscionability, which is based on public policy considerations, has been defined as contractual overreaching, imposition, oppressiveness, or patent unfairness." 22 N.Y.JUR.2D Contracts § 156, at 192 (1996). The doctrine applies to those instances where a contract's terms are oppressive to one party (i.e., substantive unconscionability) or when a contract results from an unequal bargaining process (i.e., procedural unconscionability). Sablosky v. Edward S. Gordon Co., Inc., 73 N.Y.2d 133, 138, 538 N.Y.S.2d 513, 535 N.E.2d 643 (1989); People v. Two Wheel Corp., 71 N.Y.2d 693, 699, 530 N.Y.S.2d 46, 525 N.E.2d 692 (1988).

In the present case, defendants state their defense of unconscionability as follows:

It is claimed that in this case that the plaintiff's silence on the existence of a guaranty, its negative answers when asked if such a document existed and the long, silent period of time between its alleged execution and the attempted enforcement deprived the [defendants] of their right to terminate the alleged obligation.

Defendants' Memorandum of Law, at 4. It is evident that defendants' reliance on the doctrine of unconscionability is misplaced. These allegations are better suited for a defense of equitable estoppel. Thus, the Court addresses these allegations below.

(ii) Equitable Estoppel

Defendants assert that the above allegations also give rise to a defense of equitable estoppel. Equitable estoppel, simply put, "is some inequitable or fraudulent conduct engaged in by the party sought to be estopped which is reasonably relied upon by the other party to his detriment." 57 N.Y.JUR.2D Estoppel, Ratification, and Waiver Evidence and Witnesses 15, at 18-19 (1996); Broadworth Realty Assocs. v. Chock 336 B'way Operating, Inc., 168 A.D.2d 299, 562 N.Y.S.2d 630, 632 (1st Dep't 1990); appeal denied, 77 N.Y.2d 808, 570 N.Y.S.2d 488, 573 N.E.2d 576 (1991).

In the present case, defendants' claim of equitable estoppel fails as a matter of law. Taking defendants' allegations in turn, there is no support for defendants' head-snapping proposition that a contract is unenforceable simply because one party fails to send the other periodic reminders of the contract. Neither is a guarantee unenforceable because of a lapse of time. See, e.g., Chemical Bank v. Sepler, 60 N.Y.2d 289, 294, 469 N.Y.S.2d 609, 457 N.E.2d 714 (1983); The Travelers Indem. Co. v. Buffalo Motor & Generator Corp., 58 A.D.2d 978, 397 N.Y.S.2d 257, 258 (4th Dep't 19...