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LEWIS v. NATIONAL CITY BANK

January 4, 1993

FREDERICK D. LEWIS, Plaintiff and Counterdefendant,
v.
NATIONAL CITY BANK, Defendant and Counterplaintiff.


ALESIA


The opinion of the court was delivered by: JAMES H. ALESIA

MEMORANDUM OPINION AND ORDER

 Plaintiff, Frederick D. Lewis ("Lewis"), filed this action against defendant, National City Bank ("National City"), for damages resulting from the defendant's alleged wrongful repossession of plaintiff's boat. Jurisdiction is based on diversity of citizenship as plaintiff and defendant are citizens of different states. Currently before the Court is National City's motion for summary judgment on Lewis' claim and on its counterclaim and Lewis' cross motion for summary judgment on his claim pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, defendant National City's motion for summary judgment is granted and plaintiff Lewis' cross motion for summary judgment is denied.

 I. FACTS

 On December 21, 1985 Lewis purchased a new Chris Craft 381 Catalina boat ("the Boat") from Exit 9 Marine, Inc. in Ohio. To finance the purchase of the Boat, Lewis entered into a Note and Security Agreement with National City in the amount of $ 117,500.00 and pledged the Boat as collateral to secure repayment. (Defendant's Reply to Plaintiff's Statement of Material Fact.) Pursuant to the terms of the Note and Security Agreement, Lewis was to repay National City the principal amount of $ 117,500.00 plus interest to be calculated at a variable rate, payable in 180 monthly installments, beginning on January 20, 1986 and due on the 20th day of each month thereafter. (Plaintiff's Statement of Material Fact). The agreement provided that if Lewis failed to make an installment payment on time he would be considered in default. (Note and Security Agreement, P 11(1).) Upon default, National City then had the right to require the immediate payment of the whole amount outstanding and could pursue any rights and remedies under the law. (Id. at P 11(7)). Additionally, the agreement contained a non-waiver provision whereby National City could delay enforcing any of its rights under the security agreement by the acceptance of late or partial payments without losing any of its rights. (Id. at P 13(v)).

 The parties do not dispute that Lewis failed to remit his first installment payment on time and regularly thereafter failed to make his payments on time as required by the terms of the Note and Security Agreement. (Plaintiff's Statement of Material Fact, pp. 2-4, and Exhibit B). Lewis' account history demonstrates this pattern of late payments by Lewis which were accepted by National City, but for which National City assessed late charges. (Plaintiff's Statement of Material Fact, Exhibit B). The parties further do not dispute that on or about October 16, 1987 National City repossessed the Boat due to late payments by Lewis for July through October, 1987. Lewis, however, was allowed to regain possession of the Boat by paying all past-due installment payments and repossession charges. (Plaintiff's Statement of Material Fact, par. 7, Exhibits B, C, and D).

 Lewis' account history also shows that on November 10, 1989 National City advised Lewis that it was accelerating his loan under the Note and Security Agreement and demanded that Lewis immediately pay the entire balance due within 10 days. At that time, Lewis had failed to tender the September and October 1989 installments but had paid an extension fee for the August 1989 payment. Despite this acceleration letter the Bank accepted the installment payments which were due rather than requiring payment of the debt in full. (Plaintiff's Statement of Material Fact, P 9, Exhibits B, E, and F). The check remitting payment for September and October was initially dishonored but was ultimately redeemed by National City on or about November 29, 1989. (Id., Exhibit F). After this date, Lewis again made several late payments in or around April 1990 which were accepted by National City and for which National City assessed late charges. (Plaintiff's Exhibit B).

 On July 1, 1990 National City wrote Lewis regarding his overdue payment for June 20, 1990. This letter informed Lewis that he was to "remit payment by return mail and/or telephone to resolve this matter." (Plaintiff's Statement of Material Fact, Exhibit G). In response, Lewis stated that he did not expect to have the June 20th payment before July 16, 1990, but that if he did he would send it in. (Plaintiff's Statement of Material Fact, Exhibit H). As of July 16, 1990 Lewis had failed to pay the June monthly installment. Therefore, on that date National City wrote Lewis a letter stating that it was accelerating Lewis' debt and demanding payment of the entire balance within ten days or it would taken any action "deemed necessary to protect its interests." (Plaintiff's Statement of Material Fact, Exhibit I).

 In response to the July 16, 1990 notice of acceleration, Lewis did not pay the accelerated amount of the debt but rather tendered a check dated August 2, 1990, for $ 2,901.42. National City initially negotiated this check but later attempted to return the money to Lewis via a check of their own. (Plaintiff's Statement of Material Fact, Exhibits R, S, ad T). Subsequently, Lewis' attorney, Ariel Weisberg, returned this check back to National City, (Exhibit S - letter dated August 13, 1990), stating that National City had waived its rights under default by accepting ad negotiating this check. National City responded that it rejected this argument and restated that the account had been accelerated ad that partial payment of the amount due did not cure the default. (Plaintiff's Statement of Material Fact, Exhibit S - letter dated August 16, 1990). National City also negotiated a check for $ 1,450.71 on August 20, 1990 for the amount due on that date. (Plaintiff's Statement of Material Fact, Exhibit U).

 After all this, and because of Lewis' failure to pay the accelerated debt, National City transferred title of the Boat from Lewis to National City on August 21, 1990. (Defendant's Statement of Material Fact, Mortenson Aff., P 11.) National City then repossessed the Boat on August 31, 1990, (Defendant's Statement of Material Fact, Mortenson Aff. P 12), and notified Lewis by letter dated August 31, 1990 that it would sell the Boat at a public auction to be held on September 20, 1990. (Defendant's Statement of Material Fact, Mortenson Aff. P 13). On that date, National City did sell the Boat to the highest bidder for $ 69,500 and applied the proceeds from the sale of the Boat, minus the repossession expenses, against the principal amount due under the Note and Security Agreement. After reducing the amount due with the sale proceeds, principal of $ 51,883.89 plus interest remained. By letter dated October 18, 1990, National City demanded that Lewis pay this balance. Lewis has not paid National City any monies under this request. (Defendant's Statement of Material Fact, Mortenson Aff. PP 14-17).

 II. DISCUSSION

 A. Standard of Review

 Under Rule 56(c), summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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. 56(c). A party opposing a motion for summary judgment must set forth specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Schroeder v. Lufthansa German Airlines, 875 F.2d 613, 620 (7th Cir. 1989). A genuine issue of material fact exists only where there is sufficient evidence favoring the non-moving party to support a jury verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). All reasonable factual inferences must be viewed in favor of the non-moving party. Holland v. Jefferson Nat'l Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir. 1989). If the evidence presented by the non-movant ...


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