DAVID M. LAWSON, District Judge.
Plaintiff Prestige Capital Corporation provides non-traditional financing to business ventures. In 2006, Prestige entered into an agreement to purchase the accounts
Plaintiff Prestige Capital Corporation is a nationwide factoring firm that provides financing to small and mid-sized companies who cannot obtain traditional bank financing for any number of reasons. According to the record it presented in support of its motion for summary judgment, Prestige purchased the account receivable of Solar Stamping and Manufacturing, LLC, (Solar) through a Purchase and Sale Agreement (PSA) dated November 29, 2006. In that agreement, Solar agreed to sell to Prestige all of its rights in certain accounts receivable for 75% of their face value. The PSA included fourteen warranties that Solar made concerning the status of the accounts. In relevant part, this provision states as follows:
Mot. Summ. J., Ex. 1, PSA ¶ 5. According to Prestige, this warranty grants it the right to charge back the account in the event that it learns the account is subject to an offset or counterclaim. The charge-back privilege allows Prestige to seek a total refund from Solar of the amount paid for the specific account, without reassigning the account back to Solar. The PSA
Concurrently with the PSA, Prestige obtained personal guaranties from Michael Porath, Richard Mast, Richard Ignagni, and James Glasgow. The guaranties each state:
Mot. Summ. J., Ex. 1, 2, 4.
On February 26, 2007, Prestige obtained an additional guaranty by defendant Michigan Gage and Manufacturing, LLC, signed by Michael Porath as the President and CEO (the "Gage Guaranty"). That guaranty states:
Mot. Summ. J., Ex. 2, Gage Guaranty. That guaranty includes a forum selection clause through which "[t]he Guarantors... irrevocably consent[] to the nonexclusive jurisdiction of the Courts of the State of New Jersey or any Federal court in such State in connection with any action or proceeding arising out of or related to this Guaranty." Ibid.
According to the plaintiff, several account debtors asserted offsets against a number of the accounts transferred to Prestige under the PSA with Solar. As a result, Prestige collected less from these accounts than it had expected. The plaintiff alleges that it attempted on several
On January 30, 2008, Prestige and Michigan Gage entered into an additional agreement in which Michigan Gage acknowledged that it was liable to Prestige under the Gage Guaranty for $948,605.21, plus interest and attorney's fees (the "Agreement"). The Agreement specifically acknowledged that the Gage Guaranty remained in effect and established a payment schedule by which Michigan Gage could repay the debt. The schedule called for payments "at the rate of $5,000 per week, payable each successive Friday, commencing February 22, 2008 until August 22, 2008. Thereafter, the remaining open balance of the Indebtedness shall be due and payable in full on September 2, 2008." Mot. Summ. J., Ex. 3, Agreement ¶ 2(a). As with the other documents in this case, the Agreement also included a choice of law clause designating the "laws of the State of New Jersey" at the rules of decision. Id. ¶ 7.
The plaintiff avers that Michigan Gage failed to make any of the payments required under the Agreement. On March 25, 2009, the plaintiff filed a complaint against defendants Michigan Gage and Manufacturing, LLC, Michael Porath, Richard Mast, Richard Ignagni, and James Glasgow. In early April 2010, the plaintiff reached a settlement with defendants Ignagni and Glasgow and the Court dismissed them from the case. On February 5, 2010, the plaintiff filed a motion for summary judgment against defendants Michigan Gage, Porath, and Mast. The defendants have not responded.
A motion for summary judgment under Federal Rule of Civil Procedure 56 presumes the absence of a genuine issue of material fact for trial. The Court must view the evidence and draw all reasonable inferences in favor of the non-moving party, and determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotes omitted).
A fact is "material" if its resolution affects the outcome of the lawsuit. Lenning v. Commercial Union Ins. Co., 260 F.3d 574, 581 (6th Cir.2001). "Materiality" is determined by the substantive law claim. Boyd v. Baeppler, 215 F.3d 594, 599 (6th Cir.2000). An issue is "genuine" if a "reasonable jury could return a verdict for the nonmoving party." Henson v. Nat'l Aeronautics & Space Admin., 14 F.3d 1143, 1148 (6th Cir.1994) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). When the "record taken as a whole could not lead a rational trier of fact to find for the nonmoving party," there is no genuine issue of material fact. Mich. Paytel Joint Venture v. City of Detroit, 287 F.3d 527, 534 (6th Cir.2002).
The party bringing the summary judgment motion has the initial burden of informing the court of the basis for its motion and identifying portions of the record that demonstrate the absence of a genuine
In a defensive motion for summary judgment, the party who bears the burden of proof must present a jury question as to each element of the claim. Davis v. McCourt, 226 F.3d 506, 511 (6th Cir.2000). Failure to prove an essential element of a claim renders all other facts immaterial for summary judgment purposes. Elvis Presley Enters., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 895 (6th Cir.1991). "[T]he party opposing the summary judgment motion must `do more than simply show that there is some "metaphysical doubt as to the material facts."'" Highland Capital, Inc. v. Franklin Nat'l Bank, 350 F.3d 558, 564 (6th Cir.2003) (quoting Pierce v. Commonwealth Life Ins. Co., 40 F.3d 796, 800 (6th Cir.1994), and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). "Thus, the mere existence of a scintilla of evidence in support of the [opposing party]'s position will be insufficient; there must be evidence on which the jury could reasonably find for the [opposing party]." Ibid. (quoting Anderson, 477 U.S. at 252, 106 S.Ct. 2505) (internal quote marks omitted).
When the moving party also bears the ultimate burden of persuasion, the movant's affidavits and other evidence not only must show the absence of a material fact issue, they also must satisfy that burden. Vance v. Latimer, 648 F.Supp.2d 914, 919 (E.D.Mich.2009); see also Stat-Tech Liquidating Trust v. Fenster, 981 F.Supp. 1325, 1335 (D.Colo.1997) (stating that where "the crucial issue is one on which the movant will bear the ultimate burden of proof at trial, summary judgment can be entered only if the movant submits evidentiary materials to establish all of the elements of the claim or defense"); Resolution Trust Corp. v. Gill, 960 F.2d 336, 340 (3d Cir.1992). In his commentary on affirmative motions for summary judgment, Judge William Schwarzer explains:
William W. Schwarzer, et al., The Analysis and Decision of Summary Judgment Motions, 139 F.R.D. 441, 477-78 (1992) (footnote omitted).
This case is before the Court on the basis of diversity jurisdiction, 28 U.S.C. § 1332, and the plaintiff's claim is based entirely on state law. Therefore, the Court must apply the law of the forum state's highest court. Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58, S.Ct. 817, 82 L.Ed. 1188 (1938). If the state's highest court has not decided an issue, then "the
As noted above, the guarantees signed by the defendants contain choice-of-law provisions requiring the application of New Jersey law. Federal courts sitting in diversity apply the choice-of-law rules of the forum state (in this case, Michigan choice-of-law rules). Equitable Life Assur. Soc. of United States v. Poe, 143 F.3d 1013, 1016 (6th Cir.1998). When a contract contains a choice-of-law clause, "Michigan choice of law rules require courts to examine the factors articulated in sections 187 and 188 [of] the Second Restatement [of Conflicts]." Meridian Leasing, Inc. v. Assoc. Aviation Underwriters, Inc., 297 F.Supp.2d 972, 977-78 (W.D.Mich.2004) (citing Chrysler Corp. v. Skyline Indus. Servs., Inc., 448 Mich. 113, 122-25, 528 N.W.2d 698 (1995)). Under Section 187, "[t]he first step of analysis. . . is to determine whether the contractual parties could have resolved the particular issue being litigated by an explicit provision in the contract. If they could have, then the choice of law provision is enforceable." DaimlerChrysler Corp. Healthcare Benefits Plan v. Durden, 448 F.3d 918, 923 (6th Cir.2006). "[B]oth Michigan choice-of-law rules and general equitable choice-of-law policies support enforcing parties' agreed-upon choice-of-law clauses absent any strong public policy concerns to the contrary." Bennett v. Am. Online, Inc., No. 06-13221, 2007 WL 2875169, at *13 n. 6 (E.D.Mich. Sept. 28, 2007) (citing In re Dow Corning Corp., 419 F.3d 543 (6th Cir.2005)).
The choice-of-law provisions in the guaranties certainly could have been the subject of negotiations and resolved by the explicit language included in the agreements. See Durden, 448 F.3d at 923. Michigan law requires the Court to enforce the parties' agreements concerning the body of law governing their contracts, unless there is a strong policy reason for not doing so. See Bennett, 2007 WL 2875169, at *13 n. 6. There is none here. To the contrary, New Jersey clearly has a relationship to this conflict, as the plaintiff is a New Jersey resident. In addition, New Jersey law is substantially similar to Michigan law concerning the construction and enforcement of guaranty agreements. New Jersey law, therefore, governs.
Under New Jersey law, a guaranty is a contract. New Jersey courts have held that "[t]he rules governing the construction of contracts generally are to be referred to . . . in resolving a question as to the interpretation of a contract of guaranty." Garfield Trust Co. v. Teichmann, 24 N.J.Super. 519, 95 A.2d 18, 22 (N.J.Super.App.Div.1953); see also Center 48 Ltd. P'ship v. May Dep't Stores Co., 355 N.J.Super. 390, 810 A.2d 610, 618-19 (N.J.Super.App.Div.2002); First Bank & Trust Co. v. Siegel, 36 N.J.Super. 207, 115 A.2d 152, 153 (N.J.Super. Law Div.1955). Under New Jersey law, the elements of a valid contract are: (1) parties competent to enter into a contract; (2) a proper subject matter; (3) legal consideration; (4) mutuality of agreement; and (5) mutuality of obligation. See, e.g., Oscar v. Simeonidis, 352 N.J.Super. 476, 800 A.2d 271, 276
The plaintiff has offered specific evidence that the defendants signed the guaranties; the promises contained therein required payment in the event that Solar did not make good on its recourse obligations; Prestige relied on the guaranties in purchasing the accounts without performing a time-consuming audit of the accounts' validity; the guarantors' liability was triggered by Solar's default and subsequent bankruptcy; the guarantors were notified of their obligation to pay; and the remaining defendant guarantors have not paid. The defendants have not responded to the plaintiff's motion and therefore have not contested the plaintiff's allegations.
However, the plaintiff has the ultimate burden of persuasion at trial and must demonstrate the absence of a genuine issue of material fact by presenting sufficient evidence to carry its ultimate burden at this early stage on all the elements of its claim, including damages. The plaintiff alleges that it has suffered more than $880,000 in damages as a result of the defendants' failure to pay under the guaranty agreements, but it failed to supply any evidence in its motion papers of the accounts it purchased, the offsets claimed against those accounts, or any amounts the plaintiff has been able to recover to date.
The plaintiff filed a supplemental brief along with an attached two-page affidavit from Alan Eliasof, the plaintiff's vice president and chief financial officer. The brief states the conclusion that Prestige "has suffered, and continues to suffer, substantial damages in the amount of $616,796.36," without interest or costs, and argues that the appropriate remedy under New Jersey law is expectation damages or compensatory damages. Suppl. Br. at 2-3. The only factual support the plaintiff provides for this amount is Eliasof's affidavit, in which he merely states that he has reviewed the books and records and has determined that defendant Michigan Gage & Manufacturing, LLC, owes the plaintiff $616,796.36 plus attorney's fees and costs. There are no facts supporting this naked conclusion; for instance, Eliasof does not discuss the method he used to calculate the amount, he provides no proof the amounts owed by the individual defendants, and he did not furnish any proof of the accounts that breached the warranties given by Solar, which surely the plaintiff could have done since it tried an adversary proceeding in the bankruptcy court involving these same issues. Because the plaintiff carries the burden of persuasion on all the issues
The Court finds that there is no genuine issue of material fact on the issue of the defendants' liability under the guaranties and the plaintiff is entitled to judgment as a matter of law on that part of its claim. However, despite two opportunities to do so, the plaintiff has not offered sufficient evidence of its damages.
Accordingly, it is
It is further
