G.B.J. Corp. v. Eastern Ohio Paving Co., 5:94 CV 1009.
| Decision Date | 07 October 1996 |
| Docket Number | No. 5:94 CV 1009.,5:94 CV 1009. |
| Citation | 950 F.Supp. 816 |
| Parties | G.B.J. CORPORATION, et al., Plaintiffs, v. EASTERN OHIO PAVING CO., et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
James C. Jones, New York City, for plaintiff.
Larry A. Zink, Zink, Zink & Zink, Canton, OH, Stuart J. Moskovitz, Stadtmauer, Bailkin, New York City, for defendants.
This matter is before this Court pursuant to Defendants' Motion for Summary Judgment (Doc. # 53). Plaintiffs have filed their Memorandum of Law in Opposition (Doc. # 57) and Defendants' have filed their Reply Memorandum. (Doc. # 60). The Court has reviewed the motions, affidavits, depositions, and exhibits filed by the parties and for the reasons that follow, Defendants' Motion for Summary Judgment (Doc. # 53) is GRANTED.
The present matter was filed on April 8, 1993, in the United States District Court, Southern District of New York. On May 4, 1994, Judge Miriam Cedarbaum transferred this matter to the Northern District of Ohio. On or about May 9, 1994, before the file had been certified to the Clerk of this District, Plaintiffs filed an Amended Complaint. (Doc. # 22). This case was assigned to the docket of Judge David D. Dowd on May 16, 1994. Thereafter the parties entered into discovery and the initial case management schedule was assigned. On October 24, 1994, Judge Dowd issued a Memorandum of Opinion and Order (Doc. # 39) denying the Defendants' Motion to Dismiss the Amended Complaint and granting Plaintiffs' leave to file a second amended complaint. Plaintiffs' Second Amended Complaint was filed on November 9, 1994.
On April 28, 1995, Defendants filed the present Motion for Summary Judgment. After the reply and response of the respective parties were filed the Court transferred the case to the docket of this Court on July 7, 1995. Accordingly, the Motion for Summary Judgment is fully briefed and ripe for decision.
As a preliminary matter, this Court must discuss the proper law to be applied to the facts of this case. This case involves several separate parties from different states. The Plaintiffs initially filed this case in the Southern District of New York. The Plaintiffs causes of action concern loan documents and the propriety of a judgment entered into in the State of New York. Upon motion by Defendants', this case was transferred to the Northern District of Ohio. When a district court transfers a case for convenience, the choice of law rules of the transferor court apply. See Martin v. Stokes, 623 F.2d 469 (6th Cir.1980); Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). Therefore, this Court will apply New York law to the facts of this case.
The parties to this case are as follows:
Lightweight Environmental Products Corporation (hereinafter "LEPCO") is a New York corporation involved in the manufacture of various chemical compounds. Plaintiff, Patrick Callanan, (hereinafter "Mr. Callanan") was President, sole director and shareholder of LEPCO from November 1989 until June 15, 1992. Plaintiff, Jeffrey Gelmin, (hereinafter "Mr. Gelmin") is the President and sole-shareholder of Plaintiff GBJ Corporation (hereinafter "GBJ"), and Topaz Capital Corporation (hereinafter "Topaz"). Defendant, Eastern Ohio Paving Company, (hereinafter "EOP") is a West Virginia corporation with its principal place of business in Wheeling, West Virginia. Defendant, Glenn Straub, (hereinafter "Mr. Straub") is the President and chief operating officer of EOP. Defendant, Jeffrey Zink, (hereinafter "Mr. Zink") is an attorney with his place of business in Canton, Ohio. He is currently vice-president and secretary of LEPCO. Defendant, Fred Leistiko, (hereinafter "Mr. Leistiko") is a Canton, Ohio resident and currently the sales manager of LEPCO.
The following uncontested facts of the present matter have been determined from the affidavits, exhibits and depositions properly attached to the briefs of the parties.
Prior to the actions pertinent herein, Sequa Capital Corporation (hereinafter "Sequa")1 entered into a Loan and Security Agreement for $700,000 with LEPCO. This agreement was evidenced by a promissory note. The agreement gave Sequa a first security position in all of the assets of LEPCO. In order to secure the loan with Sequa, Mr. Callanan entered a Stock Pledge Agreement relating to all of his stock in LEPCO. In addition, between 1989 and 1992, Plaintiffs GBJ, Topaz and Mr. Callanan made numerous unsecured loans to LEPCO. These unsecured loans were evidenced by notes between the Plaintiffs and LEPCO.
On October 29, 1991, Sequa filed suit against LEPCO in order to obtain judgment on its promissory note. As a result of that lawsuit, Sequa obtained a Judgment and Order from the Supreme Court of New York against LEPCO in the amount of $849,769 on April 23, 1992. Thereafter, on June 9, 1992, Defendant EOP acquired from Sequa an Assignment of Sequa's Judgment against LEPCO. In addition, EOP acquired an assignment of Sequa's contract rights in the assets of LEPCO.
Plaintiffs' Second Amended Complaint sets forth five causes of action. All of these causes of action stem from Plaintiffs assertion that the Defendants agreed to assume and pay the promissory note obligations of LEPCO.
In Count One, Plaintiffs allege that subsequent to the execution of the assignment by Sequa to EOP, Defendants EOP, Mr. Zink and Mr. Straub assumed the promissory note obligations of LEPCO. Plaintiffs claim Defendants have failed to repay the loan.
In Count Two, Plaintiffs allege that the Defendants fraudulently seized control of LEPCO's stock, assets and inventory. Plaintiffs seek both a preliminary and permanent injunction from this Court to enjoin Defendants from further operating LEPCO and from further exercising any voting or other rights over the stock of LEPCO.
In Count Three, Plaintiffs allege that Defendants failed to repay loans made to LEPCO under the terms of the Mr. Callanan notes.
In Count Four, Plaintiffs allege fraud by Defendants EOP, Mr. Zink and Mr. Straub and are alleged to have misled Mr. Callanan. Plaintiffs allege that Defendants misled Mr. Callanan into believing that the Defendants would enter into a written agreement with Callanan and GBJ in the future.
In Count Five, Plaintiffs allege that Defendants EOP, Mr. Zink, Mr. Straub and Mr. Leistiko breached certain implied covenants of good faith and fair dealing regarding the note obligations and ongoing assurances of financing for LEPCO.
In determining whether summary judgment is to be granted, the court must consider only that evidence which is properly before it. Summary judgment is appropriate where the court is satisfied "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 burden of showing the absence of any such "genuine issue" rests with the moving party:
[A] party seeking summary judgment always bears the initial responsibility of informing the district 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 demonstrates the absence of a genuine issue of material fact.
Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (citing FED.R.CIV.P. 56(c)). The court will view the summary judgment motion "in the light most favorable to the party opposing the motion." U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962), see also U.S. v. Hodges X-Ray, Inc., 759 F.2d 557, 562 (6th Cir.1985).
Summary judgment should be granted if a party who bears the burden of proof at trial does not establish an essential element of their case. Tolton v. American Biodyne, Inc., 48 F.3d 937, 941 (6th Cir.1995) (citing Celotex, 477 U.S. at 322, 106 S.Ct. at 2552). Accordingly, "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Copeland v. Machulis, 57 F.3d 476, 478 (6th Cir.1995) .
Once the moving party has satisfied its burden of proof, the burden then shifts to the nonmover. The nonmoving party may not simply rely on its pleadings, but must "produce evidence that results in a conflict of material fact to be solved by a jury." Cox v. Kentucky Department of Transportation, 53 F.3d 146, 149 (6th Cir.1995). The text of FED.R.CIV.P. 56(e) states:
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.
Id. The Federal Rules identify the penalty for the lack of such a response by the nonmoving party as an automatic grant of summary judgment, where otherwise appropriate.
The district judge, in considering this type of motion, is to examine "[o]nly disputes over facts that might affect the outcome of the suit under governing law." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. The court will not consider non-material facts, nor will it weigh material evidence to determine the truth of the matter. Id. at 249, 106 S.Ct. at 2510-11. The judge's sole function is to determine whether there is a genuine factual issue for trial; this does not exist unless "there is sufficient evidence favoring the nonmoving party for a jury...
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GBJ Corp. v. Eastern Ohio Paving Co.
...alleged improper seizure of a corporation, were dismissed by the district court on summary judgment. G.B.J. Corp. v. Eastern Ohio Paving Co., 950 F.Supp. 816 (N.D.Ohio 1996) [GBJ I ]. The plaintiffs appeal. We affirm in part and reverse in part, and remand this case for further The plaintif......