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FORD MOTOR CREDIT v. DEVALK LINCOLN-MERCURY

January 25, 1985

FORD MOTOR CREDIT COMPANY, A DELAWARE CORPORATION, PLAINTIFF,
v.
DEVALK LINCOLN-MERCURY, INC., AN ILLINOIS CORP., ET AL., DEFENDANT.



The opinion of the court was delivered by: Nordberg, District Judge.

MEMORANDUM OPINION AND ORDER

This action is before the Court on motion of plaintiff, Ford Motor Credit Corp. ("Ford Credit") for summary judgment. For the reasons set forth below, Ford Credit's motion is granted in part and denied in part.

Facts

This action arises from agreements between Ford Credit and the defendants, DeValk Lincoln-Mercury, Inc. (the "Dealership"), a Ford dealership, and four individuals, Harold G. DeValk, June DeValk, John M. Fitzgerald and Esther R. Fitzgerald. From the beginning of the Dealership's operation, Ford Credit provided financing for the Dealership's purchase of new and used vehicles, under the Automotive Wholesale Plan Application for Wholesale Financing and Security Agreement ("Wholesale Financing Agreement"). Ford Credit also provided working capital to the Dealership pursuant to a Capital Loan Security Agreement ("Capital Loan Agreement").

Under the Wholesale Financing Agreement, Ford Credit advanced to the Dealership the purchase price for each vehicle the Dealership purchased for its inventory. In return, the Dealership was obligated to repay the amount advanced for each vehicle at or before the time of its sale to a customer. The Dealership agreed to pay Ford Credit interest on the outstanding amount of wholesale financing.

The DeValks and the Fitzgeralds also executed written guaranties to pay all debts of the Dealership owed to Ford Credit, dated March 10, 1977 and February 12, 1979.

On October 12, 1979, the Dealership voluntarily terminated its operations. On October 16, 1979 Ford Credit learned that the Dealership had sold five new vehicles without paying Ford Credit the money advanced to purchase the vehicles under the Wholesale Financing Agreement. Because of these "out of trust sales," Ford Credit declared the Dealership in default of both the Wholesale Financing Agreement and the Capital Loan Agreement. The assets of the Dealership were liquidated and the proceeds were applied against the Dealership's obligations. The automobile inventory was liquidated for approximately 94 percent of the principal amount owed under the Wholesale Financing Agreement.

In its complaint, Ford Credit claims that defendants owe the remaining principal and interest due under the Wholesale Financing Agreement, plus the principal and interest due under the Capital Loan Agreement. Ford Credit alleges, and the defendants admit, that Ford Credit has demanded payment by the individual defendants under their guaranties, and that such payment has been refused.

In Count I of its complaint, Ford Credit seeks recovery of amounts allegedly owed by the Dealership under both the Wholesale Financing Agreement and the Capital Loan Agreement. In Count II, Ford Credit seeks recovery of these same amounts under the written guaranties executed by the individual defendants. Ford Credit has moved for summary judgment on both counts.

Summary Judgment

On a motion for summary judgment, the moving party has the burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Cedillo v. International Association of Bridge and Structural Iron Workers, 603 F.2d 7, 10 (7th Cir. 1979). The nonmoving party is entitled to all reasonable inferences that can be made in its favor. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). However, the plaintiff may not merely rely on conclusory pleadings to withstand summary judgment. In responding to a motion for summary judgment, a plaintiff must set forth specific facts in affidavits or otherwise showing that there are genuine issues that must be decided at trial. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir. 1983).

The purpose of the summary judgment procedure is to eliminate a trial in cases where a trial is unnecessary and results in delay and expense. Mintz v. Mathers Fund, Inc., 463 F.2d 495, 498 (7th Cir. 1972). As the Seventh Circuit Court of Appeals has noted, with the ever-increasing burden upon the judiciary, persuasive reasons exist for the utilization of summary judgment procedures whenever possible. Kirk v. Home Indemnity Co., 431 F.2d 554, 559-60 (7th Cir. 1970). Courts therefore will not strain to find the existence of a genuine issue where none exists. Id.

Count I — The Dealership

Ford Credit has moved for summary judgment under Count I of the complaint, asserting that the Dealership does not dispute that it entered into and received funds pursuant to both the Wholesale Financing Agreement and the Capital Loan Agreement. The Dealership contends that several genuine issues of material fact exist that preclude summary judgment against it.*fn1 First, it asserts that a genuine issue of material fact exists as to whether the parties agreed to the amount of wholesale credit to be extended and whether Ford Credit breached that agreement with the Dealership. The Dealership essentially contends that the parties in some manner agreed to a credit limit of ...


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