US v. McAllister, 86 CV 3860.

• Decision Date: 17 June 1987
• Docket Number: No. 86 CV 3860.,86 CV 3860.
• Parties: UNITED STATES of America, Plaintiff, v. Charles D. McALLISTER and Alice A. McAllister, Defendants.
• Court: U.S. District Court — Eastern District of New York

661 F. Supp. 1175

UNITED STATES of America, Plaintiff, v. Charles D. McALLISTER and Alice A. McAllister, Defendants.

No. 86 CV 3860.

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

June 17, 1987.

Andrew J. Maloney, U.S. Atty., E.D.N.Y. (Don A. Paradiso, Brooklyn, N.Y., of counsel), for plaintiff.

Pinks, Brooks, Stern & Arbeit, Hauppauge, N.Y. (Steven G. Pinks, of counsel), for defendants.

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action by the United States Small Business Administration ("SBA") to recover on a loan guaranty executed by defendants. Plaintiff has moved for summary judgment. Fed.R.Civ.P. 56. For the reasons stated below, the motion is granted.

Facts

The following facts are not in dispute. On May 11, 1979 Peconic Bay Industries, Inc. ("Peconic Bay"), acting through its president, defendant Charles D. McAllister, executed a promissory note in which it agreed to pay to the State Bank of Long Island ("the Bank") $85,000 plus interest in sixty monthly installments. Peconic Bay also delivered as collateral a chattel mortgage covering all of its personal property. As further security for the loan, both defendants executed and delivered to the bank a guaranty of all past, present or future obligations of Peconic Bay up to the amount of $85,000 plus interest, costs and expenses.

The documents were executed on SBA forms. The guaranty agreement explicitly stated: "State Bank of Long Island does hereby assign all rights and interest in this document to the Small Business Administration."

Peconic Bay made payments until February 1983. It apparently ceased doing business in March 1983, and, defendants say, its assets were turned over to the Bank. Demand was made on defendants for the unpaid principal of $29,431.60 plus interest, but no payments were forthcoming. On November 14, 1986 this action was commenced seeking $43,225.21 — the amount of the unpaid principal plus $13,793.61 in accrued interest as of November 5, 1986.

Along with the complaint defendants were served with requests for admissions. Among the items they were asked to admit were the genuineness of the documents and the amount of the indebtedness. Defendants neither responded to the requests nor sought additional time to do so. They do not on this motion contest the truth of the matters requested to be admitted, but rather contend that those facts do not support the entry of summary judgment against them.

Discussion

Fed.R.Civ.P. 56(c) provides, in relevant part, that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 36 provides that failure to respond to requests for admission operates as an admission and that admitted matters are conclusively established for purposes of the action.

Defendants have admitted that the note and guaranty, and their signatures thereon, are genuine; that Peconic Bay defaulted on the note; that $29,431.60 plus interest is due under the note; and that they have not made any payments on Peconic Bay's account since the default. The guaranty states that defendants "unconditionally guarantee to the Bank the due and punctual payment when due ... of the principal of and interest on and all other sums payable, or stated to be payable, with respect to the note of Peconic Bay, made by Peconic Bay to the Bank...." Under the unambiguous terms of the instrument, defendants are liable for the claim here.

Despite this seemingly straightforward state of affairs, defendants contend that there are several disputed fact issues that bar the entry of summary judgment. First they state that plaintiff has failed to establish that the note executed by Peconic Bay payable to the Bank has been negotiated to the SBA under Article Three of the Uniform Commercial Code. They have not, however, suggested how that fact might be relevant. This suit seeks recovery under the guaranty executed by the defendants as individuals, not on the note executed by the corporate entity Peconic Bay. Nothing in defendants' agreement conditions their liability on negotiation of the note.

Defendants next argue that plaintiff has not shown that the guaranty was assigned by the Bank to the SBA. They overlook the plain language so stating on the face of the document. In addition, the assignment to the SBA of the note and the guaranty was described in the government's statement under Local Civil Rule 3(g). That provision requires the party moving for summary judgment to submit a short, separate statement of the material facts as to which it contends there is no genuine issue to be tried. See Rule 3(g) of the Civil Rules of the United States District Courts for the Southern and Eastern Districts of...