TICOR TITLE INS. v. FFCA/IIP 1988 PROPERTY CO.

• Decision Date: 05 July 1995
• Docket Number: No. 3:93-CV-692RM.,3:93-CV-692RM.
• Parties: TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, Plaintiff, v. FFCA/IIP 1988 PROPERTY COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Indiana

898 F. Supp. 633

TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, Plaintiff, v. FFCA/IIP 1988 PROPERTY COMPANY, et al., Defendants.

No. 3:93-CV-692RM.

United States District Court, N.D. Indiana, South Bend Division.

July 5, 1995.

COPYRIGHT MATERIAL OMITTED

Paul J. Peralta, Baker and Daniels, South Bend, IN, Ronald D. Gifford, Baker and Daniels, Indianapolis, IN, for plaintiff Ticor Title Insurance Company of California.

E. Spencer Walton, Jr., Louise A. Kirk, May Oberfell and Lorber, South Bend, IN, Alan S. Townsend, Stephen E. Arthur, Bose McKinney and Evans, Indianapolis, IN, Glen A. Burbridge, Alan W. Anderson, Elizabeth E. Brown, Andrew P. McCallin, Rothgerber Appeal Powers and Johnson, Denver, CO, for defendants FFCA/IIP 1988 Property Co. and Franchise Finance Corp. of America.

MEMORANDUM AND ORDER

MILLER, District Judge.

This cause comes before the court on plaintiff Ticor Title Insurance Company of California's ("Ticor") motion for summary judgment, defendants FFCA/IIP 1988 Property Company and Franchise Finance Corporation of America's (collectively referred to as "defendants") motion for partial summary judgment, and other various motions, including the defendants' motion for oral argument, the defendants' motion to deem their statement of material facts admitted, Ticor's motion to file its statement of genuine issues instanter, the defendants' motion for reconsideration of an order allowing Ticor to file a reply brief, or in the alternative, to strike the reply brief, and the defendants' motion for leave to file a reply brief with respect to its motion for partial summary judgment.

The parties' briefs have sufficiently apprised the court of the relevant issues, and accordingly the court denies the defendants' motion for oral argument. For the following reasons, the court grants Ticor's motion for summary judgment, denies the defendants' motion for partial summary judgment, denies the defendants' motion to deem their statement of material facts admitted, grants Ticor's motion to file instanter its statement of genuine issues, denies the defendants' motion for reconsideration of an order allowing Ticor to file a reply brief, or in the alternative, to strike the reply brief, and grants the defendants' motion for leave to file a reply brief with respect to their motion for partial summary judgment.

I.

Defendant Franchise Finance Corporation of America ("FFCA") is a Delaware corporation and a partner in several partnerships that purchase new and existing restaurants and simultaneously leases them back to the sellers. FFCA typically uses standard documentation to memorialize the sale-leaseback transactions. Under the terms of these agreements, FFCA acquires ownership of the real property in fee simple through a general warranty deed. A purchase agreement expressly states that FFCA is contemporaneously entering into a lease of the property to the seller, and the lease is attached as an exhibit to the purchase agreement. Under the standard lease agreement, the lessee has an option to purchase the property after ten years for the greater of the fair market value of the property or the FFCA's initial cost of purchasing the property.

Ticor writes title insurance policies for properties located throughout the United States, including in Indiana. Throughout the 1980s, Ticor and its predecessor, Pioneer Title Insurance Company, issued title insurance policies to FFCA in over eight hundred sale-leaseback transactions. Ticor also acted as the escrow and closing agent with respect to each of these transactions.

One of the FFCA partnerships engaged in sale-leaseback transactions is FFCA/IIP 1988 Property Company (the "Partnership"). On August 3, 1989, the Partnership purchased from and leased back to Mr. R. Vijay Raghavan a Hardee's Restaurant in Granger, Indiana. Ticor issued a title insurance policy with respect to that property and served as the escrow and closing agent for the transaction. On July 30, 1991, Mr. Raghavan defaulted on his lease, and on August 12, 1991 he filed a voluntary Chapter 11 petition in bankruptcy. During the course of those bankruptcy proceedings, Mr. Raghavan attempted to recharacterize the Partnership's ownership interest in the property as a security interest by claiming that the deed was actually a mortgage.

FFCA did not submit written notice of Mr. Raghavan's recharacterization claim to Ticor until February 26, 1993. On May 26, 1993, FFCA and Mr. Raghavan resolved the recharacterization claim and filed an Agreed Entry with the bankruptcy court. In the Agreed Entry, Mr. Raghavan acknowledged that the Partnership owned the property and that the lease was a true lease and not a security agreement. As mentioned, FFCA did not notify Ticor of Mr. Raghavan's recharacterization claim until February 26, 1993. At that time, FFCA sent to Ticor a notice of claim letter, asserting that Ticor was obligated to pay approximately $36,000 in legal fees that FFCA incurred with respect to the recharacterization claim; the requested amount was raised to about $70,000 in September 1993.

Ticor brought this action on September 1, 1993 in St. Joseph County Circuit Court seeking a determination of the parties' rights and obligations under the title insurance policy covering the property purchased from Mr. Raghavan. The defendants removed the action to this court and filed counterclaims against Ticor seeking a declaratory judgment in its favor, and also seeking damages (including punitive damages) for breach of contract and breach of the duty of good faith and fair dealing.

II.

A.

The parties' cross-motions were filed on October 3, 1994; responses were filed on November 4, 1994. On November 6, 1994, the defendants filed a motion to deem their statement of material facts admitted without controversy because Ticor had not included a statement of genuine issues in its brief in response to the defendants' summary judgment motion. District Rule 56.1 provides that a party's brief in response to a summary judgment motion should include

in its text or appendix thereto a "Statement of Genuine Issues" setting forth, with appropriate citations to discovery responses, affidavits, depositions, or other admissible evidence, all material facts as to which it is contended there exists a genuine issue necessary to be litigated.

In determining the motion for summary judgment, the court will assume that the facts as claimed and supported by admissible evidence by the moving party are admitted to exist without controversy, except to the extent that such facts are controverted in the "Statement of Genuine Issues" filed in opposition to the motion, as supported by the depositions, discovery responses, affidavits and other admissible evidence on file.

N.D.Ind.L.R. 56.1.

That Ticor failed to comply with this rule when it failed to include a statement of genuine issues in its response brief is beyond dispute, and the court has discretion to require strict compliance with the District Rule. See, e.g., Waldridge v. American Hoechst Corp., 24 F.3d 918, 923 (7th Cir. 1994). The defendants have not been prejudiced by Ticor's failure, however, because Ticor filed a motion to file instanter its statement of genuine issues on November 22, 1994. The court grants Ticor's motion to file its statement of genuine issues, and deems such filed as of November 22, 1994. Therefore, the court denies the defendants' motion to deem admitted without controversy their statement of material facts.

B.

After the parties filed their cross-motions for summary judgment and response briefs, Ticor filed a motion to file a reply brief with respect to its summary judgment motion; the court granted Ticor's motion on November 15. One week later, the defendants filed a motion for reconsideration of the court's decision to allow Ticor to file a reply brief, or in the alternative, to strike Ticor's reply brief. In their motion, the defendants contend that the parties had agreed by letter that reply briefs would not be needed and therefore would not be filed with respect to the cross-motions for summary judgment. Ticor responds that although the parties had agreed not to file reply briefs, it felt that a reply brief was necessary to discuss arguments and evidence raised in the defendants' response to Ticor's summary judgment motion.

On December 16, the defendants filed a motion for leave to file a reply brief with respect to its motion for partial summary judgment, arguing that it should be allowed to file the reply brief since Ticor had filed a total of three briefs. Since the court previously allowed Ticor to file a reply brief, it shall afford the same privilege to the defendants. The court grants the defendants' motion for leave to file a reply brief, and deems the defendants' reply brief filed as of December 16. Having granted the defendants' motion for leave to file a reply brief, the court denies the defendants' motion for reconsideration of the order allowing Ticor to file a reply brief, or in the alternative, to strike Ticor's reply brief.

III.

With these preliminary matters resolved, the court turns to the parties' cross-motions for summary judgment. Ticor seeks summary judgment on its complaint for a declaratory judgment and on the defendants' counterclaims. The defendants seek summary judgment on the declaratory judgment action.

A party seeking summary judgment must demonstrate that no genuine issue of fact exists for trial and that the movant is entitled to judgment as a matter of law. If that showing is made and the motion's opponent would bear the burden at trial on the matter that forms the basis of the motion, the opponent must come forth with evidence to show what facts are in actual dispute. A genuine factual issue exists only when there is sufficient evidence for a jury to return a verdict for the motion's opponent. Summary judgment should be granted if no reasonable jury could return a verdict for the motion's opponent.

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