Stewart Title Guar. Co. v. Williams
| Decision Date | 25 October 2012 |
| Docket Number | Civil Action No. 11-cv-02636-WJM-CBS |
| Parties | STEWART TITLE GUARANTY COMPANY, a Texas corporation, Plaintiff, v. JAY H. WILLIAMS, an individual, and NEWTOWN TEN, INC., a Colorado corporation, Defendants. |
| Court | U.S. District Court — District of Colorado |
Plaintiff Stewart Title Guaranty Company ("Plaintiff" or "Stewart") brings this action against Defendants Jay H. Williams ("Williams") and Newtown Ten, Inc. ("Newtown") alleging that Defendant Newtown and its guarantor Defendant Williams borrowed money in the form of a promissory note and failed to pay back the money. Before the Court are: (1) Plaintiff's Motion for Partial Summary Judgment on Plaintiff's First and Fifth Claims for Relief ("Plaintiff's Motion") (ECF No. 27); and (2) Defendants' Motion for Summary Judgment ("Defendants' Motion") (ECF No. 37).
For the reasons set forth below, Plaintiff's Motion for Partial Summary Judgment is granted, and Defendants' Motion for Summary Judgment is denied.
The following facts are taken from the record and are either undisputed orviewed in the light most favorable to Defendants:
Plaintiff Stewart is a Texas corporation. (Scheduling Order, "Undisputed Facts" (ECF No. 18) at Section 4(a)(hereinafter, "Undisputed Facts").) Defendant Newtown is a Colorado corporation. (Id. at 4(b).) Defendant Williams is an individual who resides in Colorado. (Id. at 4(c).)
The real property underlying this dispute is vacant land located in El Paso County, Colorado (the "Property"). (Id. at 4(d).) On December 12, 1991, the Federal Deposit Insurance Corp., in a receivership capacity, conveyed the Property to Williams by quitclaim deed. (Id. at 4(e).) On June 27, 2000, Williams conveyed the Property to Newtown by warranty deed. (Id. at 4(f).)
On November 9, 2007, Newtown executed a $500,000.00 promissory note (the "Note") in favor of Randall Realty & Investment Co. (together with any successor in interest, "Randall Realty"). (Id. at 4(l).) In conjunction with the Note, and in consideration for the payment obligations contained therein, Randall Realty advanced $500,000.00 to Newtown. (Aff. of Randall Karsh, ¶ 4 ("Karsh Affidavit"), attached as Exhibit C to Plaintiff's Motion.) As security for the Note, a Deed of Trust from Newtown to Randall Realty, which encumbered the Property (the "Randall Realty Deed of Trust"), was recorded in the real property records of El Paso County, Colorado. (Undisputed Facts at 4(n).) The Note was secured, inter alia, by the absolute and unconditional personal guarantee of Williams (the "Guaranty"). (Guaranty, attached as Exhibit D to Plaintiff's Motion.)
On March 13, 2009, Newtown conveyed the Property to Trend Investments, LLC ("Trend") by warranty deed recorded in the real property records of El Paso County, Colorado. (Undisputed Facts at 4(q),(r).) 1st Denver Title, Inc. ("Denver Title") was the company that conducted the closing of the sale of the Property from Newtown to Trend (the "Trend Closing"). (Id. at 4(s).) Trend also granted a deed of trust for the benefit of California Bank & Trust ("CB&T") on May 8, 2009 which encumbered the Property (the "CB&T Deed of Trust"). (Id. at 4(u).) Denver Title also conducted the loan closing between Trend and CB&T. (Id. at 4(y).)
In conjunction with the loan closing between Trend and CB&T, CB&T requested and paid for a $1,660,000.00 lender's policy of title insurance that was issued by Denver Title on May 13, 2009 and was underwritten by Stewart (the "CB&T Policy"). (Id. at 4(z).) Denver Title was the agent of Stewart for purposes of issuing title policies to borrowers and lenders, which were underwritten by Stewart. (Id. at 4(t).) As part of the title examination for the CB&T Policy, Joey Grant, a Denver Title examiner, located and reviewed the Randall Realty Deed of Trust. (Request for Admission No. 3, attached as Exhibit A to Defendants' Motion.) Joey Grant concluded that the Randall Realty Deed of Trust did not encumber the Property. (Id. at Request 4.)
On October 22, 2009, Newtown and Randall Realty entered into an amendment of the Note (the "Note Amendment") in which Newton agreed that the principal balance owed pursuant the Note would be increased to $578,336.00. (Undisputed Facts at 4(dd)(ee).) In conjunction with the Note Amendment, Williams executed an Acknowledgment and Agreement of Guaranty (the "Acknowledgment of Guaranty"),whereby he: (1) acknowledged receipt of the Note Amendment; (2) consented to its terms; and (3) reaffirmed his obligations pursuant to the Guaranty. (Acknowledgment of Guaranty, attached as Exhibit F to Plaintiff's Motion.)
On January 3, 2011, Randall Realty called for a default under the Note. (Undisputed Facts at 4(gg)). On September 2, 2011, Stewart purchased the Note from Randall Realty. (ECF No. 7, ¶ 7.) Stewart paid Randall Realty $890,000.00 in consideration for the assignment of the Note; of this amount, $861,424.00 was the unpaid principal and default interest owed on the Note as of September 2, 2011. (ECF No. 27, at Exhibit C, ¶¶ 14-15.) Since September 2, 2011, Stewart has had the right to foreclose on the Property, but has chosen not to do so. (Request for Admission No. 10, attached as Exhibit A to Defendants' Motion.)
On October 26, 2011, Stewart, through counsel, made a formal demand on Williams to satisfy all amounts owed under the Note. (October 26, 2011, Letter, attached as Exhibit L to Plaintiff's Motion.) Williams has made no payments to Stewart pursuant to the Guaranty or the Note, and the Note remains unpaid. (Yalung Affidavit, ¶ 7.) As of the date of this Motion, the amount of unpaid principal and default interest due under the Note and the Guaranty is $1,018,604.38, with a per diem of $849.62. (Id., ¶ 10.)1
Plaintiff filed its initial Complaint on October 10, 2011 (ECF No. 1) and filed an Amended Complaint on November 8, 2011 (ECF No. 7). Based on the circumstances described above, Plaintiff brings three claims against Defendants for breach of contract (Claims One, Two, and Five) and two claims for fraud (Claims Three and Four). (Id.)
On March 5, 2012, Plaintiff filed a Motion for Partial Summary Judgment pursuant to Federal Rule of Civil Procedure 56 asking the Court to grant summary judgment in its favor on Plaintiff's First and Fifth Claims for breach of contract.2 (ECF No. 27.) Specifically, Plaintiff seeks summary judgment on its First Claim for breach of contract for default under the Note against both Defendants, and on its Fifth Claim for breach of contract for default under the Guaranty against Defendant Williams. (Id.) On March 29, 2012, Defendants filed their Response to Plaintiff's Motion (ECF No. 30), and Plaintiff filed its Reply in Support of its Motion on April 13, 2012 (ECF No. 31).
On June 18, 2012, Defendants filed their Motion for [Partial] Summary Judgment asking the Court to grant summary judgment in their favor on Plaintiff's fraud claims (Claims Three and Four), and on their affirmative defense that Plaintiff failed to mitigate its damages relating to its breach of contract claims. (ECF No. 37.) On August 31, 2012, Plaintiff filed a Response to Defendants' Motion (ECF No. 48), and Defendantsfiled their Reply in Support of their Motion on September 14, 2012 (ECF No. 52).3
These Motions are now ripe for resolution.
Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or, conversely, is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248-49 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132 (10th Cir. 2000); Carey v. U.S. Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987).
A fact is "material" if it pertains to an element of a claim or defense; a factual dispute is "genuine" if the evidence is so contradictory that if the matter went to trial, a reasonable juror could return a verdict for either party. Anderson, 477 U.S. at 248. The Court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. Houston v. Nat'l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).
The moving party bears the initial burden of showing an absence of evidence to support the nonmoving party's case. Celotex, 477 U.S. at 325. Where the non-movantbears the burden of proof at trial, the non-movant must then point to specific evidence establishing a genuine issue of material fact with regard to each challenged element. See Reed v. Bennett, 312 F.3d 1190, 1194 (10th Cir. 2002); In re Ribozyme Pharms., Inc. Sec. Litig., 209 F. Supp. 2d 1106, 1111 (D. Colo. 2002).
Plaintiff has asked the Court to grant summary judgment in its favor on its First and Fifth claims for breach of contract. Defendants seek summary judgment on Plaintiff's Third and Fourth claims alleging fraud against Defendants, and on their affirmative defense that Plaintiff failed to mitigate its damages relating to its breach of contract claims. The Court will discuss each Motion in turn below.
A claim based on a failure to make a payment on a promissory note is, in essence, a breach of contract claim. See Roberts v. Adams, 47 P.3d 690, 694 (Colo. App. 2001). A party asserting a breach of contract claim must prove the following elements: (1) the existence of a contract; (2) performance by the plaintiff or some justification for nonperformance; (3) failure to perform the...
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