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Heller Financial Leasing, Inc. v. Gordon

March 28, 2006

HELLER FINANCIAL LEASING, INC., A DELAWARE CORPORATION, PLAINTIFF,
v.
ARTHUR E. GORDON, AN INDIVIDUAL RESIDENT OF CALIFORNIA, ROSE A. GORDON, AN INDIVIDUAL RESIDENT OF CALIFORNIA, NAN R. EISLEY BENNETT, AN INDIVIDUAL RESIDENT OF CALIFORNIA, AND JEFFREY P. BENNETT, AN INDIVIDUAL RESIDENT OF CALIFORNIA, DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiff Heller Financial Leasing, Inc.'s ("Heller") motion for summary judgment on the issue of damages on the claims brought against Defendant Arthur E. Gordon and Defendant Rose A. Gordon (collectively referred to as "Gordons"). This matter is also before the court on the Gordons' motion for leave to file an amended Local Rule 56.1 response, the Gordons' motion to strike portions of Heller's 56.1 response, the Gordon's motion to strike certain declarations, and the Gordons' motion to bar. For the reasons stated below, we deny Heller's motion for summary judgment on the issue of damages. We grant the Gordons' motion to strike portions of Heller's Local Rule 56.1 response. We deny as moot the Gordons' motion for leave to file an amended Local Rule 56.1 response, the Gordon's motion to strike certain declarations, and the Gordons' motion to bar.

BACKGROUND

In August 2000, Pace, LLC ("Pace") entered into a promissory note ("Promissory Note") and an Aircraft Chattel Mortgage Security Agreement regarding an aircraft ("Aircraft") with Heller, under which Heller loaned Pace $18,000,000. At the same time, as inducement to Heller to make the loans and extend credit to Pace, the Gordons each entered into a guarantee agreement ("Guarantees") with Heller. In the Guarantees, the Gordons agreed to pay Heller "on demand . . . the due and punctual payments and performance of all indebtedness of Pace to Heller." (Guarantee Par. 1). Pace defaulted on its obligation to repay Heller and the Gordons failed to honor their obligations to act as guarantors. In July 2002, Heller entered into a Voluntary Surrender and Transfer Agreement ("Surrender Agreement") with Defendants and Pace whereby Pace agreed to voluntarily convey title and possession of the Aircraft to Heller. Heller brought the instant action against the Defendants seeking to recover money owed to Heller pursuant to the Guarantees. On October 19, 2005, we granted Heller's motion for summary judgment on the claims brought against the Gordons and we dismissed the claims brought against Defendant Nan R. Eisley Bennett and Defendant Jeffrey P. Bennett. Heller now moves for summary judgment on the issue of damages in regard to the claims brought against the Gordons.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In seeking a grant of summary judgment, the moving party must identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). This initial burden may be satisfied by presenting specific evidence on a particular issue or by pointing out "an absence of evidence to support the non-moving party's case." Id. at 325. Once the movant has met this burden, the non-moving party cannot simply rest on the allegations in the pleadings, but, "by affidavits or as otherwise provided for in [Rule 56], must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "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 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the non-moving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255; Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000).

DISCUSSION

Heller seeks a total of $13,721,860.70 in damages for the claims that were brought against the Gordons. Heller seeks $6,250,000 for what Heller contends is the difference between the outstanding principal balance of $18,000,000 and the value of the Aircraft. Heller also seeks $5,902,655.28 in accrued interest through December 2005, $1,248,637.76 for repair and maintenance costs on the Aircraft, $125,000.00 for broker fees, and $195,567.66 for legal fees.

I. Motions Relating to Local Rule 56.1 Statements

The Gordons move to strike Heller's response to the Gordons' statement of material facts arguing that the response fails to comply with Local Rule 56.1. However, the Gordons have failed to show that the entire response or even a substantial portion of the response is not in compliance with Local Rule 56.1. In such an instance, rather than striking the entire Local 56.1 response, it is appropriate to focus on the paragraphs that are objected to by the movant. The Gordons object to various paragraphs of Heller's statement of facts on the grounds that the paragraphs contain legal arguments and legal conclusions. A statement of material facts, as its title implies, should provide the court with facts. Malec v. Sanford, 191 F.R.D. 581, 585 (N.D. Ill. 2000). A statement of facts cannot be utilized by parties as a means to augment their briefs with additional legal arguments or legal conclusions. See id. (stating that "[t]he purpose of the 56.1 statement is to identify for the Court the evidence supporting a party's factual assertions in an organized manner: it is not intended as a forum for factual or legal argument").

The Gordons specifically object to Heller's statement of material facts paragraph numbers 30, 31, 32, 33, 34, 36, 37, and 39. In paragraph 30, Heller asserts that it "has suffered . . . damages" in certain amounts. (SF Par. 30). However, whether Heller has suffered damages is a legal issue. In paragraph 31, Heller improperly makes reference to the "satisfied portion" of the Surrender Agreement and concludes the paragraph by asserting that the amounts mentioned are the amounts "for which the Gordons are liable." (SF Par. 31). Again, such statements are legal conclusions. In paragraph 32, Heller asserts the amount of interest that has accrued, how to calculate the interest rate, and the principal "owed by the Gordons." (SF Par. 32). Paragraph 32 is thus a legal conclusion as to what the Gordons "owed," and a legal argument concerning how the Promissory note should be interpreted and how the interest rate should be calculated. In paragraph 33, Heller makes references to the calculation of interest and to the "amount of indebtedness." (SF Par. 33). Such matters are legal conclusions. In paragraph 34, Heller makes legal arguments and conclusions concerning matters such as the indebtedness of the Gordons, the remaining balance at issue, and the calculation of interest. (SF Par. 34). In paragraph 36, Heller states, among other things, that it installed an "emergency locating transmitter" on the Aircraft "as required by federal law . . . ." (SF Par. 36). However, whether such a transmitter was necessary under federal law is an issue of law. In paragraph 37, Heller asserts that certain maintenance and repairs to the Aircraft were "mandated by federal law." (SF Par. 36). Such a contention is a legal conclusion. Paragraph 39 consists of Heller's assertion that the hourly fees charged by Heller's attorneys were reasonable. Such an assertion is a legal conclusion. Thus, all of the above mentioned paragraphs contain legal arguments and/or legal conclusions and, accordingly, fail to comply with Local Rule 56.1. Therefore, we grant the Gordons' motion to strike, and strike paragraphs 30, 31, 32, 33, 36, 37, and 39 of Heller's Local Rule 56.1 statement of material facts.

The Gordons have also moved to file an amended response to Heller's statement of material facts. However, as is explained below, based upon the Gordons' original response to Heller's statement of material facts, it is clear that Heller cannot prevail on its motion for summary judgment. Therefore, we deny as moot the Gordons' motion for leave to file an amended response to Heller's statement of material facts.

II. Difference Between Outstanding Balance and Value of Aircraft

Heller argues that it is entitled to an award of damages for the difference between the outstanding principal balance of $18,000,000 and the value of the Aircraft, which Heller contends is $11,750,000. This difference comes to $6,250,000. The Gordons argue that they should not be required to pay the entire difference between the outstanding indebtedness owed and the value of the Aircraft because Heller did not act in a commercially reasonable manner in caring for and disposing of the Aircraft. According to the Gordons, Heller did not act in a commercially reasonable manner because Heller used the Aircraft for ...


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