The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge
This matter comes before the Court on Plaintiff Compañía Administradora De Recuperación De Activos Administradora De Fondos De Inversión Sociedad Anónima's (Compania) Motion for Summary Judgment (d/e 55) (Motion). Compania brings this action to enforce a corporate guaranty issued by Defendant Titan International, Inc. (Titan) to guarantee the debts of a Titan Uruguayan subsidiary, Fabrica Uruguaya De Neumaticos S.A. (FUNSA), to Compania's predecessor in interest, Banco de la Republica Oriental del Uruguay (BROU). For the reasons set forth below, the Motion is allowed.
On April 19, 1999, Titan executed a document entitled "Garantia Solidaria" (Guaranty) in favor of BROU. Motion, Exhibit B, Original and Translated BROU Guaranty. The Guaranty was signed by Titan's Vice President Gary L. Carlson. Carlson was Vice President of Titan and President of another Titan subsidiary, Titan Tire Company (Titan Tire). Titan Tire's comptroller Gary Schuster notarized Carlson's signature.*fn1 Titan is an Illinois corporation with its principal place of business in Illinois. Carlson executed the Guaranty in Iowa. The English translation of the Guaranty states, in part:
We hereby constitute ourselves joint sureties for the amounts currently owed or possibly to be owed in the future by the company FÁBRICA URUGUAYA DE NEUMÁTICOS S.A. ("FUNSA") to Banco de la República Oriental del Uruguay, in Checking Account, Promissory Notes, Acceptance Discount or under any other status or reason up to the amount of US$1,000,000 (U.S. Dollars one million) plus the corresponding interest, as stipulated in the respective debt documentation, until the date of payment, undertaking to pay the amount of said debt at any time Banco de la República Oriental del Uruguay ("BROU") requires, with the understanding that this guarantee also includes the renewals, repetitions, extensions, terms or periods of grace, full or partial, granted by BROU, including for the balance owed, with free of protest clause.
Motion, Exhibit B. Titan's Board of Directors issued the following resolution on March 26, 1998 (Resolution):
RESOLVED, that the directors of the Company be and hereby do authorize the Maurice M. Taylor, Jr. or his designee, which is Gary L. Carlson, be and hereby are authorized to execute such instruments, documents, certificates and other writings he deems necessary or desirable to carry out and effectuate the business of Fabrica Uruguaya de Neumaticas S.A. ("FUNSA") Motion, Exhibit D, Copy of Guaranty and Supporting Documents at Comp002785. In April 1999, Titan's Secretary Cheri T. Holley certified that the Resolution of Titan's Board of Directors was, "now in full force and effect." The certification is dated April 16, 1999, but the notary attestation states that Holley signed the certification on April 19, 1999. Id. Carlson's execution of the Guaranty was inconsistent with Titan corporate policy and was not authorized by Titan's President Maurice M. Taylor, Jr. Appendix (d/e 58) (Titan Appendix) to Defendant Titan International, Inc.'s Opposition to Plaintiff's Motion for Summary Judgment (d/e 57), Exhibit A, Affidavit of Maurice M. Taylor, Jr. (Taylor Affidavit), ¶¶ 3-4.
The debts were secured by Titan's Guaranty and by a pledge of all of FUNSA's plant and equipment (Collateral). The pledge of the Collateral was evidenced by a Pledge Contract dated December 23, 1985. Titan Appendix, Exhibit A, Taylor Affidavit, attached Translation of Pledge Contract. The Pledge Contract recited that BROU had, at that time, extended FUNSA a line of credit of up to $5,000,000.00. Id..
On March 4, 2002, FUNSA declared bankruptcy under Uruguayan law. As of the date of the bankruptcy filing, FUNSA owed more than $4,000,000.00 to BROU. On December 31, 2003, BROU transferred all of its FUNSA indebtedness to Compania, including all rights in the Collateral, and all rights against Titan under the Guaranty.
In March 2004, Compania secured an appraisal of the Collateral. The appraisal put the value of the Collateral between $1,500,000.00 and $2,300,000.00. Titan submitted to the Court an Affidavit of Dannys Correa, an auditor with PricewaterhouseCoopers Ltda. Uruguay (Pricewaterhouse). Taylor Appendix, Exhibit B, Affidavit of Dannys Correa. Correa attached working papers to his Affidavit. The Affidavit states that the working papers included an appraisal of the Collateral, dated February 15, 2000, performed by a person named Mario Durán Lasala. Pricewaterhouse received the appraisal from FUNSA. This appraisal set the final replacement cost at US$14,884,065.00, and the "final selling price" at US$9,132,450.00. Id., ¶ 5. Correa's Affidavit also contains the following caveat:
Working papers are some of the elements granting support to our report and helping us carry out our review. Working papers show the procedures conducted, the information obtained, and the results of our review. The procedures we carried out were limited to those we deemed necessary to enable us to issue our report. Accordingly, we do not provide any statement on the sufficiency or adequacy of the information contained in our working papers or our review procedures for any other purposes sought to be achieved.
On May 6, 2004, Compania sold its interest in the collateral to a third party, along with $3,000,000.00 of its claims against FUNSA, for the sum of $2,000,000.00. Compania retained more than $1,000,000.00 in debt owed by FUNSA. On March 31, 2004, and on September 24, 2004, Compania demanded payment from Titan under the Guaranty. Titan refused. Compania then brought this diversity action. The amount due and owing by FUNSA to Compania as of ...