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.
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
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.
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
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
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 ...