TANYA WALTON PRATT, District Judge.
This matter is before the Court on Plaintiff IndyCar LLC's ("IndyCar") Motion for Summary Judgment. (
The following material facts are not in dispute. Typically courts view the facts in the light most favorable to the non-moving party, "but when a party fails to respond to a motion for summary judgment, its failure `constitutes an admission . . . that there are no disputed issues of genuine fact warranting a trial.'" Terrell v. Am. Drug Stores, 65 F. App'x 76, 77 (7th Cir. 2003) (quoting Flynn v. Sandahl, 58 F.3d 283, 288 (7th Cir.1995).
In May 2015, IndyCar and non-party Boston Grand Prix ("Boston GP") entered into an agreement that Boston GP would promote an IndyCar race event in Boston, Massachusetts ("the Boston Race") for 2016 and through the year 2020 ("the Event Agreement"). (
As a condition of entering into the Event Agreement with Boston GP, IndyCar required Casey to personally guarantee payment of the Sanction Fees for 2016 and 2017 (including revenue share)
As stated in IndyCar's Statement of Material Facts Not In Dispute and found by this Court on January 4, 2017, the terms of the Guaranty were absolute and unconditional, meaning that IndyCar was not required to pursue any rights or claims against Boston GP before invoking the benefits of the Guaranty. (
The Guaranty contained a Representations Section which stated that Casey, the guarantor, had "no action or proceeding at law or in equity, or by or before any court or governmental instrumentality or agency, now pending against or, to the knowledge of Guarantor, threatened against the Guarantor that may materially and adversely affect the financial condition of Guarantor." (
IndyCar alleges that the balance sheets and other financial data that Casey produced in connection with the Guaranty contained material misrepresentations and significantly inflated his creditworthiness. IndyCar also alleges other misrepresentations in that Casey had pending litigation or threatened litigation which he did not disclose. These misrepresentations will be discussed in more detail in IndyCar's fraud claim.
Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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." Hemsworth v. Quotesmith.Com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court reviews "the record in the light most favorable to the nonmoving party and draw[s] all reasonable inferences in that party's favor." Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (citation omitted). However, "[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial." Hemsworth, 476 F.3d at 490 (citation omitted). "In much the same way that a court is not required to scour the record in search of evidence to defeat a motion for summary judgment, nor is it permitted to conduct a paper trial on the merits of a claim." Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001) (citation and internal quotations omitted). Finally, "neither the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment." Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and internal quotations omitted).
Local Rule 56-1(f) provides that the court will assume that "the facts as claimed and supported by admissible evidence by the movant are admitted without controversy to the extent that:" 1) the non-movant specifically controverts the facts with admissible evidence; 2) the movant's facts are not supported by admissible evidence; or 3) the facts alone or in conjunction with other admissible evidence, allow the court to draw reasonable inferences in the non-movant's favor sufficient to preclude summary judgment.
IndyCar contends that Casey breached the Guaranty in two distinct ways. First, he breached by not fulfilling the obligations under the Guaranty and Event Agreement to pay the Sanction Fees owed when the Boston Race was cancelled due to Boston GP's breach. Second, Casey fraudulently induced IndyCar to enter into the Event Agreement and Guaranty by misrepresenting his financial strength and ability to serve as a guarantor. The Court will discuss the breach of contract and fraud claim in turn.
"Summary judgment is particularly appropriate in cases involving written contracts." Moriarty v. Svec, 164 F.3d 323, 330 (7th Cir. 1998). Indiana courts interpret guaranties by the same rules applicable to other contracts. Noble Roman's, Inc., v. Ward, 760 N.E.2d 1132, 1137-38 (Ind.Ct.App. 2002). "Under Indiana law, a guaranty is an independent contract to assume liability for performance of a duty or payment of a debt if the primary obligor defaults in performance or payment." McEntire v. Indiana Nat. Bank, 471 N.E.2d 1216, 1223 (Ind. Ct. App. 1984) (citations omitted). To succeed on its breach of contract claim, IndyCar must prove (i) existence of a contract, (ii) breach of the contract, and (iii) damages. Wilson v. Lincoln Federal Sav. Bank, 790 N.E.2d 1042, 1048 (Ind. Ct. App. 2003).
The Magistrate Judge concluded (and this Court adopted) that the Guaranty was unconditional and absolute by the terms of the agreement. (
The Guaranty's terms subjected Casey to independent, primary liability thereunder. "Guarantor absolutely and unconditionally guarantees the full and prompt payment and performance when due of the Obligations." (
It is undisputed that the Guaranty's terms required Casey to pay the 2016 and 2017 Sanction Fees upon demand.
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The evidence in the record shows that Casey executed an unconditional and absolute Guaranty to guarantee payment for the 2016 and 2017 Sanction Fees in the event of Boston GP's breach. Because the Boston Race was cancelled due to a relationship gone wrong between Boston GP and the City of Boston, Boston GP breached due to non-performance. At that time, Casey's obligations under the Guaranty became due and his failure to compensate IndyCar resulted in his breach of his obligations thereunder. IndyCar has suffered damages as a result of Casey's breach. Casey's failure to respond to IndyCar's Motion for Summary Judgment deems IndyCar's recitation of the facts as admitted and undisputed. Therefore, IndyCar's Motion for Summary Judgment on its breach of contract claim is
IndyCar argues that Casey fraudulently misrepresented his ability to serve as a guarantor, in connection with the Event Agreement, to induce IndyCar to enter into the Guaranty. To succeed on a fraudulent misrepresentation claim, a plaintiff must prove: "(i) material misrepresentation of past or existing facts by the party to be charged, (ii) which was false, (iii) which was made with knowledge or reckless ignorance of the falseness, (iv) was relied upon by the complaining party, and (v) proximately caused the complaining party injury." Johnson v. Wysocki, 990 N.E.2d 456, 460-61 (Ind. 2013) (citations omitted). IndyCar's fraudulent misrepresentations claims are that Casey misrepresented that there was no litigation pending or threatened against him, he inflated valuations of various properties and incorrectly listed himself as titled owner of property that he did not own.
"In Indiana, an action for fraud must relate to a present or pre-existing fact." Murphy v. Mellon Accountants Prof'l Corp., 538 N.E.2d 968, 970 (Ind. Ct. App. 1989). "[T]he general rule in Indiana is that if a statement is "susceptible of exact knowledge" when made, it is a statement of fact rather than opinion. Prime Eagle Grp. Ltd. v. Steel Dynamics, Inc., No. 1:08 CV 35, 2009 WL 449173, at *3 (N.D. Ind. Feb. 23, 2009) (citation omitted).
IndyCar argues that Casey's false representation that there were no lawsuits pending or threatened against him was a fact susceptible of exact determination at the time of his execution of the Guaranty.
As mentioned previously, IndyCar contends there were three lawsuits either pending or threatened that Casey failed to disclose. Casey made the representations at issue in the Guaranty on May 8, 2015. At that time, two lawsuits were pending. North Shore Bank v. John F. Casey, et al (the "Massachusetts Lawsuit") was filed on March 26, 2015, for Casey's alleged failure to pay on a promissory note relating to his purchase of the Pro Skills Hockey Rink (the "Hockey Rink"). (
The relevant date for analyzing Casey's representations is May 8, 2015, the date he executed the Guaranty. Thus, the Colorado Lawsuit, filed on December 16, 2015, was not a pre-existing fact as of May 8, 2015. IndyCar argues that Casey was presumably put on notice of the potential for a lawsuit by Omni's demands for payments as evidenced by the counts of the Colorado Lawsuit Complaint; however, the complaint does not mention the dates that Casey stopped paying or when those demands were made to show sufficiently that Casey was aware of threatened litigation. Casey's failure to disclose the Colorado Lawsuit does not amount to a misrepresentation because that case was not filed until after he signed the Guaranty and based on the evidence produced, the Court cannot determine at what time he became aware that the lawsuit was threatened. Nevertheless, both the Massachusetts Lawsuit and Hockey Rink Lawsuit were filed before Casey executed the Guaranty. Casey's failure to disclose these two lawsuits was a false and material misrepresentation.
In addition, Casey misrepresented the value of his total assets and liabilities, and his ownership of real estate. In his Statement of Financial Condition, Casey valued his assets, including the Hockey Rink, at $38,624,804.00 and liabilities at $1,510,000.00, amounting to a $37,114,804.00 net worth. (
IndyCar argues that the "22 Hood Farm" was deeded solely to Gayle Casey, Casey's wife, and he does not have any titled ownership to the property. Although the difference in the overall mortgage total is not extreme—Casey reported a $1,100,000.00 mortgage when it was in fact $1,215,000.00—the misrepresentation is still material. In addition, the market value of the 22 Hood Farm was materially inflated and misrepresented, in that Casey listed the market value as $3,000,000.00 when the appraised land and improvements totaled $1,231,000.00. This assessment consisted of two parcels of land in two different towns: Boxford and Ipswich, Massachusetts. (
Next, IndyCar alleges that the "36 Ellery St." property belongs to John P. Casey (believed to be Casey's father) and Catherine M. Casey, as Trustees of 36 Ellery Street Nominee Trust. The Trust is recorded at the Massachusetts Registry of Deeds, but does not list the beneficiaries. (
Casey's company, Casey Summit, LLC, owns one unit of a three-family residence at "103 Summit Ave". In October 2012, the property was purchased for $85,000.00, not $125,000.00 as reported by Casey. (
Lastly, IndyCar's search did not return records in the state assessor's offices or the Registry of Deeds for the "24-66 Hood Farm Land" claimed by Casey, and Casey has not put forth any evidence to dispute this fact. Casey reported that the market value for this property was $6,000,000.00 and the cost was $4,700,000.00. Casey's failure to respond to IndyCar's Motion for Summary Judgment is deemed an admission that the property is nonexistent. Thus, the value is zero and the reporting of this property was also a material, false representation.
Based on the foregoing, Casey falsely represented numerous material existing facts when he inaccurately disclosed ownership titles, market values, mortgage amounts, and purchase costs of the various properties. This failure to produce an accurate financial statement materially misrepresented the overall value of his assets and the amount of his liabilities. IndyCar did not have the benefit of assessing an accurate and complete financial statement in evaluating Casey's ability to serve as a guarantor.
"[T]he element of actual knowledge can be inferred or "may be proven by circumstantial evidence notwithstanding the absence of a plaintiff's admission of such knowledge." Johnson v. Wysocki, 990 N.E.2d 456, 466 (Ind. 2013). Although Casey's failure to respond to IndyCar's Motion for Summary Judgment is deemed an admission of the facts, the circumstantial evidence also reveals that Casey had actual knowledge that his representations were false. At a minimum, the false market valuations and mortgage amounts of the various real estate properties were readily ascertainable from bank statements and property tax records. Furthermore, the purchase costs and titles of ownership is information that Casey could have accurately reported. As of the date that Casey executed the Guaranty, he would have been aware of at least two pending lawsuits. One of those lawsuits involved counterclaims against him for breach of contract on his purchase of the Hockey Rink, which made its inclusion on the Statement of Financial Condition reckless, if not fraudulent. Even if Casey was the true owner of the Hockey Rink at the time he made the representation, he fraudulently inflated and misrepresented the value. Thus, the Court determines that Casey's misrepresentations were made with knowledge or reckless ignorance of their falseness.
Although deception and reliance are generally questions for the trier of fact, Casey has not put forth evidence that the facts are in dispute. Carrell v. Ellingwood, 423 N.E.2d 630, 635 (Ind. Ct. App. 1981). "One relying upon a representation is bound to exercise ordinary care and diligence to guard against fraud. However, the requirement of reasonable prudence in business transactions is not extended so as to permit an intentional fraud perpetrated on the unwary." Id. Further, "a false and fraudulent representation may be relied upon by a person having no actual knowledge, even though the fact in question is a matter of public record." Id.
IndyCar relied on Casey's production of proof of his financial and legal affairs to be accurate and truthful documents. IndyCar asserts that Casey was generally regarded as a successful and wealthy businessman with an impressive resume and connections. (
For the foregoing reasons, the Court determines that, based on the undisputed material facts, IndyCar is entitled to summary judgment as a matter of law. Accordingly, IndyCar's Motion for Summary Judgment (
The Court will set this matter for a damages hearing in a separate entry.
