Harley-Davidson Credit Corp. v. Turudic
| Decision Date | 10 August 2012 |
| Docket Number | No. 3:11-cv-1317-HZ,3:11-cv-1317-HZ |
| Parties | HARLEY-DAVIDSON CREDIT CORPORATION, a Nevada corporation, Plaintiff, v. ANDY TURUDIC, individually, Defendant. |
| Court | U.S. District Court — District of Oregon |
Daniel C. Fleming
Micci J. Weiss
WONG FLEMING PC
Michael P. O'Rourke
O'ROURKE LAW GROUP, PC
Attorneys for Plaintiff
Andy Turudic
Pro se Defendant
Now before me is a Motion for Order to Dismiss Counterclaims and Third-Party Complaint and to Strike Affirmative Defenses and for Summary Judgment ("Motion to Dismiss and for Summary Judgment") (doc. #12) filed by Harley-Davidson Credit Corp. ("HDCC" or "Plaintiff"). Andy Turudic ("Turudic" or "Defendant"), pro se, filed a Counter-Motion for Summary Judgment, to Conform the Pleadings to the Evidence, to Strike, and Motion to Dismiss Plaintiff's Claims ("Counter-Motion") (doc. #23). For the reasons that follow, Plaintiff's Motion to Dismiss and for Summary Judgment is GRANTED in part and DENIED in part, and Defendant's Counter-Motion is DENIED.
This action arises out of two agreements-the Aircraft Secured Promissory Note ("Promissory Note") and Aircraft Security Agreement ("Security Agreement")-entered into between Defendant and Eaglemark Savings Bank ("Eaglemark") on June 28, 2007. Under the Promissory Note, Eaglemark agreed to lend Defendant $132,000 for the purchase of a Mooney Model M20K aircraft (the "Aircraft"). Compl., Ex. A, pp. 1-2. As security for the loan, Eaglemark and Defendant entered into the Security Agreement under which Eaglemark was granted a security interest in the Aircraft. Compl., ¶ 7; Id., Ex. C, § 1. The Complaint alleges that the Promissory Note and the Security Agreement were assigned to Plaintiff, and indeed, the Promissory Note provides that the PromissoryNote would "automatically be assigned" to Harley-Davidson Credit Corp. upon funding of the Aircraft and the Security Agreement provides that it would "automatically be assigned" to Harley-Davidson Credit Corp. upon assignment of the Promissory Note. Compl., ¶¶ 6-7; Id., Ex. A, § 10; Id., Ex. B, §12.
On April 2, 2011, Defendant repudiated the Promissory Note and stopped making his required loan payments. See Id., ¶¶ 8-9; see also Answer, ¶¶ 47, 89. On November 2, 2011, Plaintiff filed this action alleging breach of contract by Defendant.
Rule 12(f) of the Civil Rules of Civil Procedure ("Rule") provides that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent or scandalous matter . . . on its own . . . or . . . on motion . . . ." Fed. R. Civ. P. 12(f). Granting a motion to strike is within the discretion of the district court. See Fed. Sav. & Loan Ins. Corp. v. Gemini Mgmt, 921 F.2d 241, 244 (9th Cir. 1990).
Under Rule 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. The court construes pro sepleadings "liberally," affording plaintiffs the "benefit of any doubt." Hebbe v. Plier, 627 F.3d 338, 342 (9th Cir. 2010) (citation omitted).
Summary judgment is proper if the pleadings, discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. See Rule 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. E.g., Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if it could affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Once the moving party has met its burden, the burden shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 248 (quotation omitted). The non-moving party must come forward with more than "the mere existence of a scintilla of evidence." Id. at 252. Thus, "[w]here 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 Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment." Id. However, conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Thornhill Publ'n Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). "[T]he nonmoving party's evidence 'is to be believed, and all justifiable inferences are to bedrawn in [that party's] favor.'" Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Anderson, 477 U.S. at 255).
The Promissory Note and Security Agreement both contain choice-of-law provisions, which provide that the "laws of the State of Nevada and applicable Federal laws" are to govern the Promissory Note and Security Agreement. Compl., Ex. A, § 8; Id., Ex. B, § 11. Oregon courts enforce choice-of-law provisions, except where it would be unreasonable to do so because the chosen state has no substantial relationship to the parties or application of the chosen state's law would be contrary to fundamental Oregon policy. See, e.g., Capital One Bank v. Fort, 242 Or. App. 166, 170-71 (2011). Neither party argues that either of the exceptions to Oregon's general rule of enforcing contractual choice-of-law provisions applies here. As such, I interpret the provisions of the Promissory Note and Security Agreement in accordance with Nevada law.
Although Defendant asserted a third-party complaint against Eaglemark, Harley-Davidson Financial Services, Inc. ("HDFS"), and Harley-Davidson, Inc. ("HDI") in his Answer, Defendant voluntarily dismissed it. See Def.'s Counter-Mot., pp. 2, 16. Accordingly, to the extent Defendant asserted a third-party complaint in his Answer, it is dismissed without prejudice pursuant to his voluntary dismissal.
Plaintiff filed the following motions: (1) a motion to dismiss Defendant's first counterclaim for breach of contract and breach of the implied warranty of good faith andfair dealing; (2) a motion to strike all of Defendant's affirmative defenses; and (3) a motion for summary judgment in favor of its breach of contract claim.
Plaintiff seeks to dismiss Defendant's counter-claim for relief, which alleges that Plaintiff "breach[ed] the implied warranty of good faith and fair dealing by acting unreasonably . . . [thereby] den[ying] Defendant the benefits . . . [that he] had under the contract". Answer, ¶¶ 16-17. Defendant's counter-claim alleges that Plaintiff had an "implied contractual duty to . . . protect [Defendant's] financial interests" and that Plaintiff breached the implied covenant of good faith and fair dealing by not providing Defendant with a valuation for the Aircraft and by not assisting him in selling the Aircraft. Id., ¶¶ 28, 46-47. Plaintiff argues that Defendant's counter-claim fails to identify any provision in the Promissory Note or the Security Agreement obligating Plaintiff to protect Defendant's financial interests.
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and execution. A.C. Shaw Contr. v. Washoe Cnty., 105 Nev. 913, 914 (1989). To establish a claim for breach of the covenant of good faith and fair dealing, Defendant must allege: (1) Plaintiff and Defendant were parties to a contract; (2) Plaintiff owed a duty of good faith to Defendant; (3) Plaintiff breached that duty by performing in a manner that was unfaithful to the purpose of the contract; and (4) Defendant's justified expectations were denied. Blades v. Wells Fargo Bank NA, No. 2:11-CV-01389-KJD, 2012 WL 2885133, at *3 (D. Nev. 2012) (citations omitted). "A plaintiff may assert an action if the defendant intentionally breaches the intention and spirit of the agreement." Id. An action for breach of the implied covenant of good faith and fair dealing, however,arises only "in rare and exceptional cases"-when there is a special relationship between the parties. Ins. Co. of the W. v. Gibson Tile Co., Inc., 122 Nev. 455, 461 (2006). A special relationship is "characterized by elements of public interest, adhesion, and fiduciary responsibility". Id. Nevada law does not recognize a fiduciary relationship between a lender and borrower. See Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 882 (9th Cir. 2007).
The Promissory Note states that upon default by Defendant, Plaintiff "may . . . without notice and without demand, declare all of [Defendant's] obligations immediately due and payable . . . and proceed with any and all remedies set forth in the [Promissory Note] . . . or such other remedies as shall be provided by law." Compl., Ex. 1, § 5. It also states that Plaintiff "can delay or refrain from enforcing any of its rights under [the Promissory] Note without losing them." Id., Ex. 1, § 6.
The Security Agreement states that upon Plaintiff's default, Plaintiff may "without notice and without demand":
(a) Declare all of [Defendant's] obligations immediately due and payable . . .; (c) Take possession, by its agents or...
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