WesBanco Bank v. Lynne

Decision Date08 May 2020
Docket NumberCase No. 4:18-cv-00184-TWP-DML
PartiesWESBANCO BANK, INC., Plaintiff, v. JENNY LYNNE, MARINE BUILDERS, INC., MARINE INDUSTRIES CORPORATION, BYRON S. EVANCZYK, DAVID W. EVANCZYK, DAVID A. EVANCZYK, THE NEW WASHINGTON STATE BANK, UNITED STATES OF AMERICA INTERNAL REVENUE SERVICE, and INDIANA DEPARTMENT OF REVENUE, Defendants.
CourtUnited States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)

WESBANCO BANK, INC., Plaintiff,
v.
JENNY LYNNE, MARINE BUILDERS, INC.,
MARINE INDUSTRIES CORPORATION, BYRON S. EVANCZYK,
DAVID W. EVANCZYK, DAVID A. EVANCZYK, THE NEW WASHINGTON STATE BANK,
UNITED STATES OF AMERICA INTERNAL REVENUE SERVICE, and
INDIANA DEPARTMENT OF REVENUE, Defendants.

Case No. 4:18-cv-00184-TWP-DML

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA NEW ALBANY DIVISION

May 8, 2020


ENTRY GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

This matter is before the Court on Plaintiff WesBanco Bank, Inc.'s ("WesBanco") Motion for Partial Summary Judgment. (Filing No. 73.) WesBanco initiated this admiralty action to foreclose on a preferred ship mortgage, as well as an action for breach of contract and enforcement of guaranties, each of which arise out of Defendants, Marine Builders, Inc. ("Builders") and Marine Industries ("Industries"), default on commercial loans they received from WesBanco. Relevant to this Motion are the owners and operators of the two companies, Defendants David W. Evanczyk ("David W."), Byron S. Evanczyk ("Byron S."), and David A. Evanczyk ("David A.") (collectively, the "guarantor defendants"). These men guaranteed the loan agreements, and the Amended Complaint alleges mortgage indebtedness and breach of the loan agreements against them in personam. (Filing No. 74 at 11-15.) In the Motion for Partial Summary Judgment, WesBanco argues there are no disputed facts and the guarantor defendants failed to adhere to the

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terms of their guarantees. Wesbanco seeks judgment as a matter of law on Causes of Action 3, 5, and 7 of the Amended Complaint. For the following reasons, WesBanco's Motion for Partial Summary Judgment is granted.

I. BACKGROUND

The following facts are not necessarily objectively true, but as required by Federal Rule of Civil Procedure 56, the facts are presented in the light most favorable to Plaintiff as the non-moving party. See Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

A. Marine Builders

1. Loan Documents

Marine Builders entered into a commercial business loan agreement with WesBanco1 ("Builders Loan Agreement"), and on January 25, 2012, Builders executed and delivered a promissory note to WesBanco in the original principal amount of $955,000.00 (the "Builders Note"). (Filing No. 48-9; Filing No. 48-10.) The maturity date of the Builders Note, as allonged, is June 25, 2018. (Filing No. 48-11.) All remaining principal and interest was due and payable upon maturity. Id.

In consideration of this term loan, Builders, as sole owner of the Jenny Lynne, an aquatic vessel, executed and delivered to WesBanco a First Preferred Ship Mortgage (the "Mortgage") on the Jenny Lynne, securing payment of the total amount financed under the Builders Note. (Filing No. 48-12.) Builders also granted WesBanco a security interest in other collateral in a commercial

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security agreement (the "Builders Security Agreement"), further securing payment of the total amount financed under the Builders Note. (Filing No. 48-13.)

2. Guarantee

The guarantor defendants executed commercial guarantees in which they agreed to guarantee punctual payment and satisfaction of the principal amount owed by Builders to WesBanco, as well as interest thereon and all collection costs, expenses, and attorneys' fee in the following percentages:

David W. Evanczyk - 60% (Filing No. 48-18 at 2.)

David A. Evanczyk - 25% (Filing No. 48-17 at 2.)

Byron S. Evanczyk - 25% (Filing No. 48-16 at 2.)

3. Default

Builders failed to pay the Builders Note in full on its date of maturity, June 25, 2018, as required under the terms of the note. (Filing No. 48-10 at 2; Filing No. 48-11 at 2.) This was a default under the express terms of the Builders Note, Mortgage, and Builders Security Agreement, respectively. (Filing No. 48-10 at 2; Filing No. 48-12 at 6; Filing No. 48-13 at 4.) Builders still has not paid the balance due. (Filing No. 74-2 at 5.) It filed for bankruptcy on April 25, 2019.

Builders owes WesBanco $757,644.67 in principal, $61,247.87 in interest, and $42,360.69 in late fees as of June 3, 2019, plus per diem interest of $178.89. Id. at 6-7. The total collection costs, expenses, and attorneys' fees owed by Builders as of May 13, 2019, was $64,482.08. Id. Pursuant to the terms of the guarantee agreements, David W., David A., and Byron S. are responsible for 60%, 25%, and 25%, respectively, of the total amount of the principal. They are each also responsible to WesBanco, as of June 3, 2019, for $61,247.87 in interest, $42,360.69 in

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late fees, and per diem interest of $178.89 after June 3, 2019, as well as costs, expenses, and attorneys' fees in an amount equal to $64,482.08 as of May 13, 2019.

B. Marine Industries

1. Loan Documents

Marine Industries and WesBanco similarly entered into a business loan agreement in which WesBanco agreed to extend Industries a line of credit ("Industries Loan Agreement"), and on April 7, 2005, Industries executed and delivered a promissory note ("Industries Note") to WesBanco in the original principal amount of $250,000. (Filing No. 48-6; Filing No. 48-1.) In consideration for WesBanco's extension of credit, Industries granted WesBanco a security interest in certain collateral in a commercial security agreement (the "Industries Security Agreement"). (Filing No. 48-2.) The Industries Note was subsequently amended, and the principal amount was ultimately increased to $600,000. (Filing No. 48-4.)

2. Guarantee

Defendant David W. executed a commercial guarantee in which he agreed to guarantee full and punctual payment and satisfaction of 100% of the amount of the indebtedness owed by Industries to WesBanco. (Filing No. 74-11.)

3. Default

Under the terms of the Industries Loan Agreement, WesBanco agreed to make advances to Industries from time to time as long as the amount of such advances did not exceed Industries' borrowing base. (Filing No. 48-6 at 2.) Industries reported to WesBanco that as of June 30, 2018, Industries' outstanding balance of $581,213.00 exceeded its borrowing based of $504,812.00 (Filing No. 48-7 at 4; Filing No. 74-9 at 6.) In accordance with the terms of the Industries Loan Agreement, WesBanco demanded immediate repayment of all sums exceeding the borrowing base.

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(Filing No. 48-7 at 2; Filing No. 48-6 at 2.) Industries failed to cure the default, and pursuant to the provisions of the Industries Loan Agreement, WesBanco declared the entire balance due. (Filing No. 74-2 at 6.) Industries failed to pay the balance due and filed for bankruptcy on April 25, 2019. Id.

As of June 3, 2019, Industries owes WesBanco $557,589.41 in principal, $28,717.06 in interest, and $1,236.78 in late fees, plus per diem interest of $170.37. Id. at 6-7. Industries also owes WesBanco's attorney's fees and legal costs in the amount of $39,367.45 as of May 13, 2019. Pursuant to the terms of David W.'s guarantee, he is responsible for paying these amounts to WesBanco.

II. LEGAL STANDARD

The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate 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 judgment as a matter of law." Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007). A disputed fact must be "material," which means that it might affect the outcome of the case under the applicable substantive law. Liberty Lobby, 477 U.S. at 248. Disputes over irrelevant or unnecessary facts do not preclude summary judgment. Id. A genuine dispute of material fact exists if "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249.

In ruling on a motion for summary judgment, the court reviews "the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's

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favor." Zerante, 555 F.3d at 584 (citation omitted). "However, inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion." Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally, "[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial." Hemsworth, 476 F.3d at 490 (citation omitted). "The opposing party cannot...

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