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Kawasaki Motors Finance Corp. v. Vanagas

August 4, 2008

KAWASAKI MOTORS FINANCE CORPORATION, A DELAWARE CORPORATION, PLAINTIFF,
v.
BIRUTE A. VANAGAS, AN ILLINOIS CITIZEN, AND LIUDAS L. VANAGAS, AN ILLINOIS CITIZEN, DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

Plaintiff, Kawasaki Motors Finance Company ("KMFC"), brought this breach of guaranty suit against defendants Birute A. Vanagas and Liudas L. Vanagas (collectively, "the Guarantors"). The Guarantors each executed identical Continuing Guarantees (collectively, "the Continuing Guaranty") on behalf of a third party, Pinemeadow Corp., d/b/a/ Park Shore Marina ("Pinemeadow"). Under the provisions of the Continuing Guaranty, the Guarantors agreed to guarantee any debts of Pinemeadow to KMFC. Pinemeadow entered into a consent judgment with KMFC for $76,582.05. In this case, KMFC seeks to recover that debt from the Guarantors. KMFC has moved for summary judgment. [#15]. For the following reasons, summary judgment will be granted in KMFC's favor.*fn1

I. Background*fn2

On May 3, 2001, KMFC and Pinemeadow entered into a Financing and Security Agreement ("the Agreement"). Plaintiff's L.R. 56.1 Statement of Uncontested Facts (hereinafter "PS"), at ¶ 1. Under the terms of the Agreement, KMFC agreed to provide credit towards Pinemeadow's purchase of recreational utility vehicles ("the Collateral") from Kawasaki Motors Corp., U.S.A. for Pinemeadow to sell at its dealership. PS, at ¶ 2. In return, Pinemeadow agreed to pay KMFC all amounts owing with respect to each item of the Collateral that was sold. PS, at ¶ 3. Additionally, Pinemeadow agreed to hold a certain percentage of the proceeds from the sale of each piece of Collateral in trust for KMFC's benefit. Id.

On December 10, 2005, the Guarantors each executed a "Continuing Guaranty" on behalf of Pinemeadow as additional security to KMFC for extending credit to Pinemeadow. Plaintiff's Compl. for Breach of Guaranty (hereinafter "Compl."), at ¶ 9, Ex. D; PS, at ¶¶ 4-7. KMFC continued to extend credit to Pinemeadow in reliance upon the Continuing Guaranty. PS, at ¶¶ 8-10. By signing the Continuing Guaranty, the Guarantors guaranteed the prompt and unconditional performance and payment of all current and future obligations and liabilities of Pinemeadow to KMFC. PS, at ¶ 11. Specifically, Section 1 of the Continuing Guaranty states:

For valuable consideration, the undersigned ("Guarantor") irrevocably guarantees and promises to pay Kawasaki Motors Finance Corporation ("KMFC"), or order, on demand, when due whether by acceleration or otherwise, in lawful money of the United States in cash or immediately available funds acceptable to KMFC, any and all indebtedness (the "Indebtedness") of PINEMEADOW CORP ("Dealer") to KMFC. The word "Indebtedness" is used herein in its most comprehensive sense and includes any and all advances (including interest thereon), debts, obligations, and liabilities of Dealer heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary, and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Dealer may be liable individually or jointly with others or whether recovery upon such Indebtedness may be now, or later become, barred by any statute of limitations, or whether such Indebtedness may be or later become otherwise unenforceable, and any and all amendments, modifications, renewals or extensions of any Indebtedness, including, but not limited to, those which are evidenced by new or additional instruments or agreements.

Compl., Ex. C.

Under the Guaranty, the Guarantors waived all rights and defenses available to them under California Civil Code sections 2787-2855 and any other or similar statutory provisions.*fn3

PS, at ¶¶ 16-17. The Continuing Guaranty also states that the "Guarantor[s] agrees to pay reasonable attorneys' fees and all other costs and expenses which may be incurred by KMFC in the collection or enforcement of the Guarantor's obligations pursuant to this Guaranty or the Indebtedness, whether or not suit is filed." PS, at ¶ 18. The Continuing Guaranty provides that "[a]ll such amounts due[] KMFC shall be paid immediately, upon demand by KMFC, and if not paid when so demanded, shall bear interest at the highest rate allowed by law." PS, at ¶ 19.

On June 21, 2007, KMFC performed an inventory of the Collateral and discovered that Pinemeadow had breached the Agreement by selling certain items of the Collateral out of trust. PS, at ¶¶ 20, 24. KMFC filed a lawsuit against Pinemeadow in the Circuit Court for the County of Cass, Michigan. PS, at ¶ 23. That court entered a Consent Judgment in favor of KMFC and against Pinemeadow, which was signed by both parties, in the amount of $76,582.05. PS, at ¶ 25; Ex. A to Scott R. Murphy's Affidavit ("Murphy's Aff."), at ¶ 2.

Pursuant to the Continuing Guaranty, the Guarantors became immediately liable to KMFC for "any and all indebtedness" resulting from Pinemeadow's default. Compl., at ¶ 25, Defendant's Answer for Breach of Guaranty, at ¶ 25. On September 18, 2007, KMFC served Notices of Default upon the Guarantors and demanded that they pay the entire indebtedness of Pinemeadow in accordance with the Continuing Guaranty. PS, at ¶ 27. The Notice of Default letters stated that the Indebtedness totaled $77,641.65 and was due to KMFC by September 30, 2007 at 5:00 PM Eastern time. Compl., Ex. H; Murphy's Aff., Ex. B & C. The Indebtedness was broken down as follows: (i) $58,443.00 in unpaid principal; (ii) $4,948.95 in accrued and unpaid interest as of August 31, 2007; (iii) $3,250.00 in repossession fees; and (iv) $10,999.70 in attorneys' costs and fees. Murphy's Aff., Ex. B & C. The per diem charge is $35.32. Id. KMFC has not collected any money from Pinemeadow owed to KMFC under the Consent Judgment and Pinemeadow remains indebted to KMFC for the entire amount of the Consent Judgment. PS, at ¶ 26. The Guarantors have failed to remit payment to KMFC for the indebtedness owed by Pinemeadow. PS, at ¶ 28.

KMFC has now filed a motion for summary judgment in the amount of $76,582.05 (the amount of the Consent Judgment) plus interest and any and all costs and attorneys fees incurred by KMFC in bringing this lawsuit. Plaintiff's Mot. for Summ. J., at ¶ 5. The Guarantors request that the court deny the motion for summary judgment or, in the alternative, grant summary judgment only on the issue of liability, because they contest the amount of the Consent Judgment. Defendant's Resp. to Mot. for Summ. J., at ¶¶ 2, 5. They state that they are unable to determine whether the amount entered was correct or reasonable, as KMFC did not specify the basis for the calculation of the principal balance, accrued interest, repossession fees, and attorneys' costs and fees. Id. at ¶¶ 2, 5.

II. Summary Judgment Standard

Summary judgment obviates the need for a trial where 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). The party seeking summary judgment bears the burden of proving that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed. 2d 265 (1986); Ruffin-Thompkins v. Experian Info. Solutions, Inc., 422 F.3d 603, 607 (7th Cir. 2005). In response, the non-moving party cannot rest on bare pleadings alone but must use evidentiary tools to designate specific material showing that there is a genuine issue for trial. Celotex, 447 U.S. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, ...


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