Lone Star Industries, Inc. v. Nelstad Material Corp.

• Decision Date: 25 January 1993
• Docket Number: No. 92 Civ. 3040 (VLB).,92 Civ. 3040 (VLB).
• Citation: 811 F. Supp. 147
• Parties: LONE STAR INDUSTRIES, INC., Plaintiff, v. NELSTAD MATERIAL CORP. and James Capossela, Defendants.
• Court: U.S. District Court — Southern District of New York

811 F. Supp. 147

LONE STAR INDUSTRIES, INC., Plaintiff, v. NELSTAD MATERIAL CORP. and James Capossela, Defendants.

No. 92 Civ. 3040 (VLB).

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

January 25, 1993.

Lawrence E. Tofel, Tofel Berelson & Salx, New York City, for plaintiff.

John A. Tartaglia, New Rochelle, NY, for defendants.

MEMORANDUM ORDER

VINCENT L. BRODERICK, District Judge.

I

Lone Star Industries, Inc. ("Lone Star"), a supplier of stone to, and now a creditor of, Nelstad Material Corp. ("Nelstad") which is now in bankruptcy, seeks through this suit to enforce a personal guarantee of Nelstad's indebtedness to Lone Star, bearing the name of defendant James Capossela ("Capossela"), a principal of Nelstad. For the reasons which follow, I grant Lone Star's motion for summary judgment for the amount of Nelstad's debt of $580,111.40 together with prejudgment interest based on the rate provided for by contract.

It is undisputed that Nelstad incurred the indebtedness involved, that Nelstad has not paid the debt, that Capossela was a principal of Nelstad who dealt with Lone Star in connection with Lone Star's extensions of credit to Nelstad, and that the guarantee attached to Lone Star's moving papers bears a signature which Capossela recognizes as resembling his signature. Capossela cannot recall, but does not deny, signing the guarantee.

In opposition to Lone Star's motion, Capossela makes several arguments, none of which I find convincing.

II

Capossela points out that the guarantee was not attached to the complaint, but concedes that it is attached to the papers in support of Lone Star's motion for summary judgment and was shown to Capossela at his deposition. Capossela did not move to dismiss the complaint for insufficiency; moreover, notice pleading under the Fed.R.Civ.P. 8 permits allegations concerning governing documents even if not attached to the complaint. This is illustrated by Fed.R.Civ.P. Form 3, which sets forth an approved form of complaint on a promissory note that offers options of (a) attachment of the note, (b) quotation of it verbatim, or (c) an adequate description of the relevant portions of its contents.

The approach taken by the Federal Rules in this respect is the only pragmatic one, since some contract and other commercial cases (although not the present one) concern extremely lengthy documents which if attached in full would make pleadings unwieldy in the extreme. Even if absence of the guarantee as an exhibit to the complaint were a deficiency, the pleadings can be conformed to the proof under Fed. R.Civ.P. 15(b) where, as here, there is no prejudice to the opposing party.

III

Capossela argues that his failure to recall signing the note creates an issue of fact barring summary judgment to Lone Star, which bears the burden of proof on this element of its claim. I find no genuine issue of material fact, since Capossela, who does not claim inability to recognize his own handwriting, concedes that the signature on the guarantee resembles his signature and does not deny having signed the document. The surrounding facts corroborate the reasonableness of the conclusion that the signature resembling Capossela's on the guarantee is in fact that of Capossela.

It is undisputed that the document was found in the files of Lone Star, which had in fact been extending credit to Nelstad, of which Capossela was a principal and the representative in dealing with Lone Star. Under these circumstances it makes sense that Lone Star would have requested and Capossela granted a personal guarantee to protect Nelstad's supplier from the precise risk which became a reality here — the insolvency of Nelstad. In effect, the guarantee constitutes a waiver of the corporate veil — a demand often made by suppliers of closely held corporations and frequently agreed to by the principals of such corporations.

Capossela's contention that the signature on the guarantee may not be his lacks substance and is incredible in light of conceded or undisputed facts and his own testimony. Summary judgment under Fed. R.Civ.P. 56 was intended to deal with precisely this kind of situation. See Citibank, NA v. Nyland, Ltd., 878 F.2d 620 (2d Cir. 1989) (upholding grant of summary judgment to party with burden of proof).

IV

Capossela also points out that a blank space in a printed clause in the guarantee, permitting entry of a maximum amount for which the guarantor may be held liable, was left blank. He contends that this makes the guarantee incomplete, indefinite and hence fatally defective.

In Deering Milliken Inc. v. Georgette Juniors, 17 A.D.2d 405, 235 N.Y.S.2d 72 (1st Dept.1962), however, a similar contract was upheld against a similar claim of per se voidness. The Appellate Division, reversing a contrary ruling by Justice Owen McGivern in the Supreme Court, New York County and reported in 36 Misc.2d 123, 231 N.Y.S.2d 616, found that it was a reasonable interpretation open to plaintiff in that case that the blank space in the limitation clause resulted in a valid guarantee with no specific upper limitation on the liability created.

Capossela, relying on the fact that Deering Milliken merely held the defendant there not to be entitled to summary judgment voiding the guarantee involved, argues that summary judgment for Lone Star should likewise be denied. In evaluating this contention, it is important to note that Capossela has submitted no affidavits or other evidence supporting his argument that the intention of the parties was that the guarantee be void. Capossela has made no suggestion that were a trial to be held, any facts apart from those already submitted on the current motion would be developed.

Where historical facts are undisputed, their characterization may be more appropriate for the court to determine on motion than if there were genuine disputation over what happened. See Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1258 (2d Cir. 1986).

The interpretation urged by Capossela — that the intention of the parties might have been that the guarantee was nugatory — does not make sense in view of the background against which this contention must be judged. This is a business, not a consumer transaction.¹ There is no contention that this is a contract of adhesion between unmatched parties or that a take-it-or-leave-it provision was foisted on a less sophisticated trading partner. See Muratore v. M/S Scotia Prince, 845 F.2d 347, 351 (1st Cir.1988); Rakoff, Contracts of Adhesion, 96 Harv.L.Rev. 1173 (1983).

Capossela has not submitted affidavits asserting that he was rushed during the negotiations with Lone Star or had no opportunity to consult counsel or business associates before signing the guarantee. Rather, an arm's length business transaction was negotiated between a supplier and the principal of a substantial customer desiring to purchase significant quantities of stone from the supplier on credit, and the negotiation entailed the personal guarantee of a principal of the buyer. S...