Henry B. Gilpin Co. v. Moxley, 2-680A196

• Decision Date: 05 May 1982
• Docket Number: No. 2-680A196,2-680A196
• Citation: 434 N.E.2d 914
• Parties: The HENRY B. GILPIN COMPANY and Mooney-Kiefer-Stewart Co., Inc., Defendants-Appellants, v. David MOXLEY, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 914

434 N.E.2d 914

The HENRY B. GILPIN COMPANY and Mooney-Kiefer-Stewart Co Inc., Defendants-Appellants, v. David MOXLEY, Plaintiff-Appellee.

No. 2-680A196.

Court of Appeals of Indiana, Fourth District.

May 5, 1982.

Thomas G. Stayton, James H. Ham, III, Ralph F. Hall, Baker & Daniels, Indianapolis, for appellants.

Arthur H. Northrup, Indianapolis, for appellee.

MILLER, Presiding Judge.

Appellants The Henry B. Gilpin Co. (Gilpin) and Mooney-Kiefer-Stewart Co., Inc. (MKS) are appealing an adverse summary judgment rendered in favor of appellee David Moxley for amounts due under three notes of MKS guaranteed by Gilpin. Gilpin MKS contend the trial court's judgment is erroneous because 1) there existed genuine issues of material fact concerning their affirmative defenses of waiver and estoppel as to Moxley's right to claim default and accelerate the debt; and 2) there was insufficient evidence in the record to support the $8,500 attorney fee award. Because the record reveals Gilpin and MKS did not present affidavits establishing any issue of material fact with respect to their alleged defenses of waiver and estoppel, we affirm the trial court's judgment regarding liability under the notes. However, we reverse the award of $8,500 in attorney's fees (since there was insufficient evidence to support such award) and remand for further proceedings on that issue.

FACTS

On August 10, 1979 Moxley filed a multi-count complaint against Gilpin and MKS, the third count of which constituted a claim by Moxley for amounts allegedly due under three notes of MKS guaranteed by Gilpin. Specifically, count three alleged that as a consequence of MKS and Gilpin's default of a quarterly interest payment due under the three notes on July 1, 1979, Moxley had elected to accelerate immediately the entire remaining amounts on the notes plus their stated interest, for a total of "$56,390.98 with interest at 7% a year from April 1, 1979 until judgment." The count also requested $14,097.75 in attorney fees and costs.

Moxley attached as exhibits to count three of his complaint the three promissory notes of varying amounts in which MKS agreed to pay to the order of Moxley equal annual installments of principal payable each January 2, and interest (7% per year) on the outstanding balance of principal, payable on the first day of each calendar quarter commencing on April 1, 1977. Each note was "unconditionally guaranteed" by Gilpin in the event of one or more instances of default as specified by the notes. One such instance of default was defined as when "(MKS or Gilpin) shall not pay when due any installment of principal or interest on this Note when due and such payment shall not be remedied within a period of thirty (30) days." With respect to Moxley's right to accelerate payment the notes provided "if such events of default (as defined) be continuing, the payee hereof (Moxley) may declare this Promissory Note due and payable whereupon the outstanding principal balance and accrued interest thereon shall forthwith be due and payable without other notice of any kind." In a separate guaranty document Gilpin agreed to guarantee "the full and prompt payment, when due, whether by acceleration or otherwise, together with interest and all costs, expenses and attorneys' fees" of the notes in the event MKS

"shall fail to pay all or any part of the liabilities when due, whether by acceleration or otherwise according to the terms of the Promissory Notes evidencing the Liabilities so that a 'default' shall have occurred as defined in said Promissory Notes, the undersigned will, within thirty (30) days after written demand, pay the amount due and unpaid by Debtor (MKS) as aforesaid, in like manner as if such amount constituted the direct and primary obligation of the undersigned. Payee (Moxley) shall not be required, prior to any such payment by or demand on the undersigned, to make any demand upon or pursue or exhaust any of its rights or remedies against Debtor (MKS) or others with respect to the payment of any of the Liabilities."

In their answer MKS and Gilpin pleaded the affirmative defenses of waiver and estoppel. In particular, their answer alleged that on July 11, 1979 (during the 30-day grace period on their obligation to pay interest on July 1) Moxley executed a "settlement agreement" in which he agreed to accept "60% of the principal amount of his notes as full payment (including interest)." It was further alleged that in reliance on the settlement agreement MKS and Gilpin "did not pay the interest on the notes which was due and payable within thirty (30) days of July 1, 1979." MKS and Gilpin concluded their answer by asserting that Moxley had waived and was estopped from asserting any right he had to accelerate payment on the notes because he had executed the settlement agreement.

Upon Moxley's motion for summary judgment, the issues were framed as follows: Initially, Moxley filed an affidavit dated October 1, 1979, asserting that through April 1, 1979, MKS had been current on all payments of principal and interest, but that the July 1, 1979 interest payment had neither been tendered nor received. In response, a counter-affidavit was filed in purported support of the theory there were material factual questions of waiver and estoppel which would make summary judgment for Moxley inappropriate. In this regard, James E. Allen, Jr., executive vice-president of Gilpin and president and treasurer of MKS, asserted that on July 11, 1979 Moxley accepted an offer by Gilpin to pay 60% of the face value of the notes in full settlement. Attached to Allen's affidavit was a document entitled "Settlement Agreement" which was signed by "David Moxley" and which provided:

"(I)n consideration of the acceptance by other creditors of a similar plan of payment and intending to be legally bound, the undersigned agrees to accept from the Henry B. Gilpin Company payment of sixty percent (60%) of the face amount of the undersigned's claim against the Henry B. Gilpin Company within thirty (30) days from July 12, 1979 in full satisfaction of the said claim."

According to Allen's affidavit, in June, 1979 Gilpin's net worth was substantially tied up in fixed assets and thus not readily available to pay creditors such as Moxley. Consequently the company formulated a plan to rectify their liquidity problems. A part of the plan called for the sale of certain fixed assets in order to pay all unsecured creditors. On June 15, 1979, as part of this rehabilitation effort, Gilpin extended an offer to all its unsecured creditors, including Moxley, whereby Gilpin would pay them 60% of the face value of their claims, including unmatured claims, in full settlement. This written proposal was mailed to Moxley and the other unsecured creditors on or about June 15, 1979. By July 11, 1979 a majority of the unsecured creditors, including Moxley, had accepted the June 15 offer.

Meanwhile, pursuant to an invitation in the June 15 offer, a creditors' meeting was held on June 29, 1979 and the creditors elected a "Creditors' Committee." According to Allen, Gilpin's ability to perform the June 15 offer by August 12 was discussed at the meeting as well as the creditors' desire to protect themselves by seeing that Gilpin avoid bankruptcy proceedings. As stated by Allen, "(b)ankruptcy would lead to forced sales of the assets at distress prices, be costly and result in recovery for the unsecured creditors far less than the 60% offered. The creditors accordingly instructed the Creditors' Committee to work with Gilpin Management in improving (the June 15 offer) or replacing (it) with an agreement affording greater protection for the creditors." Allen's affidavit did not specifically assert, however, that Moxley had participated in the June 29 meeting of creditors, although Allen stated he had personally attended the meeting.

On August 10, 1979 the Creditors' Committee and Gilpin "executed" a new offer designed to afford Gilpin's unsecured creditors greater protection than the June 15 offer-"specifically to permit Gilpin to continue as a going concern and to minimize the threat or effects of a bankruptcy proceeding." The August 10 offer was mailed on or about August 15, 1979 to all Gilpin and MKS' unsecured creditors, including Moxley, for their acceptance. Like the June 15 offer which had been accepted by Moxley, Gilpin proposed in the new offer to pay the creditors a sum equal to 60% of their claims in full settlement; however, the new offer called "for payment to be made as follows: 1) 10% on or before September 1, 1979; 2) the remaining balance on or before March 1, 1980." The new offer also provided that "(c)reditors not assenting to or joining in this Agreement shall have funds payable to them retained under the Escrow Arrangement for distribution to Debtor upon termination of this Agreement." (The proposal called for the net proceeds of the sale or mortgage of any real property owned by Gilpin or its subsidiaries to be deposited in an Escrow Fund for distribution to accepting creditors.) In addition the new proposal stated that "to supersede (Gilpin's) offer of June 15, 1979, (Gilpin) has agreed with the request of the Creditors' Committee to withdraw the June 15, 1979 offer and substitute the (new agreement)." Significantly, Allen admitted in his affidavit that according to this new agreement "Gilpin was precluded from paying any creditor pursuant to the June 15 offer" which Moxley had accepted. Allen's affidavit also noted all the creditors of MKS except Moxley accepted the August 10 proposal.

In a letter dated September 29, 1979, Moxley made a written demand on Gilpin for payment of the entire remaining balance on the notes, plus interest and attorneys' fees. In response to this demand Gilpin mailed Moxley two checks each in the amount of $789.47 as payment for the July 1 and October 1, 1979 quarterly interest payments under the notes. Moxley returned both checks to...