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January 12, 1993

PHILIPS MEDICAL SYSTEMS INTERNATIONAL B.V., a Netherlands corporation, and N.V. PHILIPS' GLOEILAMPENFABRIEKEN, a Netherlands corporation, Defendants.


The opinion of the court was delivered by: CHARLES RONALD NORGLE, SR.


 Before the court are plaintiff's and defendants' cross-motions for summary judgment. For the reasons stated below, the plaintiff's motion is granted and the defendants' motion is denied.


 In October, 1988, High Tech Medical Parks Development Corporation ("High Tech"), a developer of outpatient care services in South America, contacted the plaintiff, Boulevard Bank National Association ("Boulevard"), for the purpose of financing the purchase of a Magnetic Resonance Imaging ("MRI") system from defendant Philips Medical Systems International B.V. ("Philips"). Boulevard agreed to loan High Tech $ 1.4 million to purchase an MRI, which would subsequently be leased to a Chilean affiliate of High Tech. The financing was to be guaranteed by Philips, and Philips, reciprocally, would receive a pledge of the MRI and an assignment of lease payments. The Philips guarantee, in turn, would be fully backed by Philips' parent corporation, defendant N.V. Philips ("NVP").

 On July 6, 1989, the documentation for the $ 1.4 million financing was complete: High Tech executed and delivered to Boulevard a document entitled "Promissory Note Fixed Maturity" (the "Note") in the principal amount of $ 1.4 million, and Philips and NVP delivered their respective guaranties to Boulevard (the "Guaranty" and the "Super Guaranty," respectively, collectively referred to as the "Guaranties"). *fn1" On July 12, 1989, Boulevard funded $ 1,115,000 of the $ 1.4 million loan, wiring $ 1,079,017.5 of that amount directly to a joint bank account held by High Tech and Philips. The balance of the loan was funded by September 18, 1989.

 Pursuant to the terms of the Note, High Tech was required to make ten payments of principal and interest on the fifteenth day of March and November, commencing November 15, 1990. Shortly before the May 15, 1991 payment date, High Tech notified Boulevard that it would be unable to make its scheduled $ 140,000 principal payment. In an attempt to avoid defaulting on the Note, High Tech proposed restructuring the loan, requesting a monthly rather than semiannual payment plan. High Tech's proposal, however, was never formally adopted, and High Tech defaulted on May 15, 1991. By letter dated May 20, 1991, Boulevard notified High Tech that the $ 1.4 million loan was in default and demanded that High Tech pay the outstanding balance due as of that date. On May 22, 1991, Boulevard sent to Philips, by telefacsimile and by overnight courier, a copy of a letter (the "Demand Letter") that explained High Tech's default and requested that Philips pay Boulevard in accordance with the terms of the Guaranty.

 On September 27, 1991, Boulevard obtained a final judgment against High Tech in the amount outstanding on the Note plus a per diem interest charge. As of September 30, 1992, the principal amount due and owing under the $ 1.4 million loan was $ 985,998.79, and the interest accrued on the unpaid principal is currently in excess of $ 20,000.

 Boulevard has filed a complaint against Philips and NVP seeking to recover the outstanding principal and interest on the Note under the Guaranties. Philips and NVP answered the complaint by denying the allegations contained therein and by asserting six affirmative defenses. The parties have subsequently filed the instant cross-motions for summary judgment, each claiming that the undisputed facts in this case require the granting of summary judgment in its favor.

 Rule 56(c) of the Federal Rules of Civil Procedure provides that for a party to prevail on a summary judgment motion "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, [must] 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). Even though all reasonable inferences are drawn in favor of the party opposing the motion, Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1440 (7th Cir. 1992), a scintilla of evidence in support of the nonmovant's position will not suffice to oppose a motion for summary judgment. Brownell v. Figel, 950 F.2d 1285, 1289 (7th Cir. 1991). Instead, the nonmoving party must elucidate specific facts demonstrating that there is a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Moreover, to preclude summary judgment, the disputed facts must be those that might affect the outcome of the suit, First Indiana Bank v. Baker, 957 F.2d 506, 508 (7th Cir. 1992), and a dispute about a material fact is "genuine" only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims and defenses. . . ." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Accordingly, the nonmoving party is required to go beyond the pleadings, affidavits, depositions, answers to interrogatories and admissions on file to designate specific facts showing a genuine issue for trial. Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir. 1991).

 In its motion for summary judgment, Boulevard asserts that the matter sub judice is essentially a straightforward action to collect on a relatively simple guaranty agreement. The defendants have responded to Boulevard's assertions by raising several defenses to the Guaranties which would render the Guaranties unenforceable and would permit the granting of summary judgment in their favor. Both parties agree that the elements of Boulevard's claim, the interpretation of the Guaranties, and the applicable defenses to the Guaranties are governed by Illinois law.

 Under Illinois law, a prima facie case for the enforcement of a guaranty is established "when the Plaintiff enters proof of the original indebtedness, the debtor's default and the guarantee." Mid-City Indus. Supply Co. v. Horwitz, 132 Ill. App. 3d 476, 483, 476 N.E.2d 1271, 1277, 87 Ill. Dec. 279 (1985). The parties have agreed to the existence of these elements; thus, Boulevard is entitled to judgment on the Guaranty unless the defendants' affirmative defenses are valid, in which case summary judgment in their favor is appropriate.

 With regard to the manner in which the Guaranties are to be interpreted, both parties have devoted a small forrest's worth of paper to the argument of "strict construction." The defendants claim that since "the guarantor is a favorite of the law," Irving Tanning Co. V. American Classic, Inc., 736 F. Supp. 161, 163 (N.D. Ill. 1990), the Guaranty *fn2" must be strictly construed in favor of Philips. Boulevard, conversely, argues that since Philips is a guarantor for consideration, the Guaranty must be construed against Philips. See e.g., Fisher v. Fidelity & Deposit Co. of Md., 125 Ill. App. 3d 632, 466 N.E.2d 332, 80 Ill. Dec. 880 (1984) ...

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