United States v. Slezak, C 79-1020.
Decision Date | 02 December 1981 |
Docket Number | No. C 79-1020.,C 79-1020. |
Parties | UNITED STATES of America, Plaintiff, v. Ray J. SLEZAK and Lois A. Slezak, Husband and Wife; Eugene N. Arnburg and Connie L. Arnburg, Husband and Wife, Defendants. |
Court | U.S. District Court — Northern District of Iowa |
Robert L. Teig, Asst. U. S. Atty., Cedar Rapids, Iowa, for plaintiff.
Eli J. Wirtz, Ahlers, Cooney, Dorweiler, Haynie & Smith, Des Moines, Iowa, for defendants.
Barry S. Mueller, Postville, Iowa, for Arnburg's.
This matter is before the court upon plaintiff's resisted motion for summary judgment filed December 15, 1980. Granted.
This action was filed on July 24, 1979 by the United States of America on behalf of the Small Business Administration (SBA) alleging that defendants were guarantors of a note issued by Iowa Excel Corporation (Excel) to the SBA which is now in default and seeking a personal deficiency judgment against defendants in the sum of $38,338.92, plus interest. Discovery has now been closed and plaintiff has once again moved for summary judgment.
Summary judgment should not be entered unless the pleadings, depositions, answers to interrogatories, and admissions show that there is no genuine issue as to any material fact. FRCP 56(c); see Poller v. Columbia Broadcasting Systems, Inc., 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962). It is an extreme remedy, not to be resorted to unless the moving party has established its right to a judgment with such clarity as to leave no room for controversy and unless the other party is not entitled to recover under any discernible circumstances. Equal Employment Opportunity Comm. v. Liberty Loan Corp., 584 F.2d 853, 857 (8th Cir. 1978). In passing upon a motion for summary judgment, the court is required to view the facts in the light most favorable to the party opposing the motion. Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-1609, 26 L.Ed.2d 142 (1970).
With this standard in mind the court considers the following facts to be undisputed at least for the purpose of this motion. On September 2, 1976 defendants Ray Slezak and Eugene N. Arnburg signed a note in the amount of $75,000.00 payable to the Iowa Business Development Credit Corporation on behalf of Excel. This note was secured by a personal guaranty signed by all defendants and by a security interest in the machinery, equipment, furniture, fixtures and inventory of Excel. The proceeds of the loan were properly disbursed to Excel, which commenced doing business. However, due to lawful government regulation the cost of doing business was increased and Excel went out of business and defaulted on the note. The security interest was foreclosed and the proceeds from the liquidation was applied to the loan balance. No claim is made that this procedure was not commercially reasonable. The SBA participated in the loan through its Guaranty loan program and through assignment from the Iowa Business Development Credit Corporation and is now owner and holder of the note and personal guaranty. The sum of $37,087.58 plus interest remains due on the note.1
The questions in this case arise from the defense raised by defendants that the collateral was impaired by plaintiff thereby releasing them from their guaranty. Specifically defendants contend that the actions of various regulatory agencies such as the Consumer Product Safety Commission, Federal Trade Commission and Department of Labor in promulgating regulations affecting the cellulose business in which Excel was engaged caused defendants to go out of business. No attack has been made by defendants on the legality of these regulations.
While these defenses, if valid, raise numerous factual issues, the threshold legal question appears to be whether, the passage of lawful regulations by an unrelated government agency which places a financial burden upon an existing business can be raised as a defense to an action by the SBA upon loan guaranties.
Initially, it seems clear that the questions raised are to be determined as a matter of federal law. See e.g. Victory Highway Village, Inc. v. Weaver, 634 F.2d 1099 (8th Cir. 1980); United States v. Willis, 593 F.2d 247 (6th Cir. 1979); United States v. Beardslee, 562 F.2d 1016 (6th Cir. 1977). It is equally clear that the starting point for determining the relative rights of the parties is the agreement itself. See e.g., United States v. Outriggers, Inc., 549 F.2d 337 (5th Cir. 1977); United States v. Proctor, 504 F.2d 954 (5th Cir. 1974); Miller v. Geerlings, 256 Iowa 569, 128 N.W.2d 207 (1964). The loan guarantee provided in part:
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...intent to bring about deterioration in the specific collateral." United States v. Wideman, supra, at 471, quoting, United States v. Slezak, 543 F.Supp. 63 (N.D.Iowa 1981). In order to establish a `willful act or willful failure to act,' by the SBA under the guaranty agreement, a guarantor m......
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