The opinion of the court was delivered by: SWEET
Plaintiff Sundsvallsbanken ("SVB") brings this motion for partial summary judgment under Rule 56, Fed.R.Civ.P., to collect on a renewal promissory note executed by defendants Fondmetal, Inc. and Robern International, Inc. (collectively "Fondmetal/USA") in favor of SVB. Fondmetal/USA opposed the motion for partial summary judgment claiming that it is entitled to pursue additional discovery under Rule 56(f) of the Federal Rules of Civil Procedure, and cross-motions for an order pursuant to Rule 37(d) imposing sanctions against SVB for refusal to submit to discovery in this action. For the reasons set forth below, SVB's motion for partial summary judgment on the note is granted, and Fondmetal/USA's motion for sanctions is denied.
The following facts are undisputed except as noted.
This action arises from the division of the business affairs of defendants and their principal Bernt C. Rathaus ("Rathaus") from those of Fondmetall/AB, a Swedish company, and its principal Anders J. Lofberg ("Lofberg"). In order to terminate and dissolve their joint venture in 1984, Rathaus, Lofberg, SVB and to a lesser extent Skandinaviska Enskilda Banken ("SEB") entered into a complex series of agreements. On June 7, 1984 Rathaus sold Lofberg all the share of common stock with Rathaus owned in Fondmetall/AB, the Swedish company. On the same day, Lofberg and Rathaus agreed that Fondmetal/USA owed Fondmetall/AB $1,400,000.00 and entered into a Settlement and Security agreement ("Settlement Agreement"). The agreement provided that Fondmetal/USA would pay Fondmetall/AB $1,400,000.00, as evidenced by a promissory note ("Note A") which was simultaneously executed and delivered with the agreement and as part consideration for the redirection of the amount which Fondmetall/AB claimed it was owed. Fondmetall/AB received a security interest in and lien upon all of Fondmetal/USA's accounts and chattel papers. The Settlement Agreement also provided that Fondmetall/AB could assign its rights under the agreement, and all the rights and obligations under the agreement would inure to the benefit of and be binding upon the assignee. Also on June 7, 1984, the parties executed two Limited Release and Indemnification Agreements ("Indemnification Agreements").
In the first indemnification, Fondmetall/AB and Lofberg released Fondmetal/USA and Rathaus from certain obligations and claims, and in turn they agreed to indemnify Fondmetall/AB and Lofberg from acts of Rathaus, the companies or officers up to June 7, 1984. In the second indemnification agreement, Fondmetal/USA and Rathaus released Lofberg and Fondmetall/AB from certain obligations and in return Lofberg and Fondmetall/AB agreed to indemnify Fondmetal/USA and Rathaus with respect to activities of the Swiss company or its officers up to June 7, 1984.
Finally, on June 7, 1984, Fondmetall/AB assigned Note A to SVB, a note which was to be paid in four installments beginning August 1, 1984, ending July 1, 1985. Simultaneously, Fondmetall/AB also assigned its rights under the Settlement Agreement to SVB. Each assignment was agreed to by Fondmetal/USA, and each assignment provided a conditional indemnification agreement for the benefit of Fondmetal/USA which by its terms indemnified the companies against any claim which SEB might make against them in relation to the Fondmetall/AB default: in the performance of a loan granted by [SEB] to [FONDMETALL] in the principal amount of U.S. $290,000. The agreement by [SVB] to hold [FONDMETAL/USA] harmless shall not include any other claim which [SEB] may have against [FONDMETAL/USA] for any other reason whatsoever. The agreement by [SVB] to hold [FONDMETAL/USA] harmless as set out above shall not entitle them to a setoff against or in any way limit the [Fondmetal/USA] obligations under the Promissory Note or the Assignment to [SVB] by [Fondmetall] of all its rights under said Promissory Note . . .,"
Neither assignment provides for personal indemnification of Rathaus. (Exh. D, Rathaus Affidavit of 7/7/85 Doc. #1 & 2).
After the completion of these agreements, Fondmetal/USA began making payments to SVB under Note A.
However, in October of 1984, Rathaus informed SVB that he would be unable to meet the payment schedule under Note A, and on October 31, 1984 the parties entered into an amended Settlement Agreement and a renewed promissory note ("Note B"). Similar events resulted in another amended Settlement Agreement and renewed promissory note ("Note C") on January 24, 1985. The amount of Note C was $450,000.00, Fondmetal/USA having paid $950,000.00 pursuant to Notes A and B. These amendments altered the payment schedules for the indebtedness to Fondmetal/USA's benefit, but provided for the immediate accrual of interest on all principal amounts outstanding under the renewal notes. Fondmetal made no payment on Note C, and SVB commenced this suit to recover the monies due.
All doubts must be resolved and all reasonable inferences must be drawn in favor of the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962) (per curiam); United States v. One Tintoretto Painting Entitled "The Holy Family with Saint Catherine and Honored Donor", 691 F.2d 603, 606 (2d Cir. 1982). This Circuit has long endorsed a policy of allowing the development of a full factual record through trial of the issues presented, a policy which is limited by the grant of summary judgment. See Jaroslawicz v. Seedman, 528 F.2d 727, 731 (2d Cir. 1975).
The burden faced by the moving party should not, however, be made is so insurmountable as to vitiate summary judgment relief. If the opponent to the summary judgment motion fails to allege that there are substantial facts in dispute, his reliance on an unsubstantiated denial of the accuracy of the movant's affidavits is insufficient to controvert a motion for summary judgment. Project Release v. Prevost, 722 F.2d 960, 968 (2d Cir. 1983); see WIXT Television, Inc. v. Meredith Corp., 506 F. Supp. 1003 (N.D.N.Y. 1980).
Fondmetal/USA has interposed legal defenses against the collection of the promissory note, and has requested postponement of the motion pursuant to Rule 56(f) asserting the need for added discovery of information under SVB's control. Rule 56(f) requires the court to ensure that the parties have a reasonable opportunity to make their record complete before ruling on a motion for summary judgment. Berne Street Enterprises v. American Export Isbrandtsen Co., 289 F. Supp. 195 (S.D.N.Y. 1968). However, Rule 56(f) is not a shield against all summary judgment motions. Litigants seeking relief under the Rule must show that the material sought to germane to the defense, and that it is neither cumulative nor speculative. Quaker Chair Corp. v. Litton Business Systems, Inc., 71 F.R.D. 527, 533 (S.D.N.Y. 1976). "A 'bare assertion' that the evidence supporting a plaintiff's allegation is in the hands of the defendant is insufficient to justify a denial of a motion for ...