the first filed rule should not be mechanically applied.
Here, the parties have conducted substantial discovery, and
they have briefed and argued a motion for summary judgment. As
of the date of the oral argument on this motion, Rabobank had
not even filed its answer in the Wisconsin action. Under these
circumstances, considerations of judicial economy and
efficiency warrant an exception to the first filed rule.
In light of these considerations, this Court will not hold
this matter in abeyance pending resolution of the Wisconsin
action merely because it was filed several weeks earlier.
Accordingly, the Court proceeds to consider Plaintiff's motion
for summary judgment.
B. Motion for summary judgment
Rabobank moves for summary judgment on its claims for
$244,212.24 in unpaid principal and $87,412.50 in unpaid
interest on the Investor Notes. To grant a motion for summary
judgment, a court must find (1) that there is no genuine issue
of material fact, and (2) that the moving party is entitled to
judgment as a matter of law because, after sufficient time for
discovery, the non-moving party has not made a sufficient
showing of an essential element of its case as to which it has
the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is
appropriate if the evidence offered demonstrates that "there is
no genuine issue as to any material fact and the moving party
is entitled to judgment as a matter of law." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d
202 (1986). The burden rests on the moving party to demonstrate
the absence of a genuine issue of material fact, Adickes v.
S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26
L.Ed.2d 142 (1970), and the Court must view the facts in the
light most favorable to the non-moving party. Meiri v. Dacon,
759 F.2d 989, 997 (2d Cir. 1985).
1. Rabobank's claim for unpaid principal
NNIC's principal argument in opposition to summary judgment
is that the Rabobank improperly applied Trust funds to the
unpaid accumulated interest on the Loan with Beefmasters rather
than to the remaining principal on the Investor Notes. Jones
Aff., ¶ 38. NNIC argues that it relied on the terms of the
Offering Memorandum of and the draft Trust Agreement*fn8
attached thereto, which it states required Rabobank as assignee
to apply the Trust funds against the principal outstanding on
the Investor Notes before Rabobank could require NNIC to answer
for any principal owed on the Investors Notes. Jones Aff., ¶
13. Rabobank urges that since it was not a party to the Trust
Agreement, the provisions therein could not require it to apply
the Trust funds in this manner. Affidavit of Michel de Konkoly
Thege, sworn to on September 26, 1991 ("Thege Aff. 2"), ¶ 6.
Rather, the draft Trust Agreement was only binding on an
It is NNIC's position that the Offering Memorandum, the Trust
Agreement, the Surety Bond and the other documents should be
read together as interdependent documents. NNIC argues that if
these documents are considered interdependent, then Rabobank's
failure to properly apply
the Trust funds constituted "wilful misconduct" or "gross
negligence," two grounds written into the Surety Bond upon
which NNIC was entitled to refuse payment. Jones Aff., ¶ 44.
Therefore, it must be determined whether the several documents
can be considered interdependent such that the parties involved
in the financing of Beefmasters intended that the proceeds of
the $1,320,000 note issued by Rabobank to Beefmasters would
first be devoted to payment of principal on the Investor Notes
and only thereafter to other partnership obligations. Whether
these documents were ever executed and whether they may be
considered interdependent, involve issues of fact which warrant
further discovery, including discovery from third parties.*fn9
As a matter of law, there are factual circumstances in which
the several documents at issue may be considered
interdependent. In Nat'l Union Fire Ins. Co. v. Turtur,
892 F.2d 199 (2d Cir. 1989),*fn10 the Second Circuit noted, "Two
separate written agreements executed at the same time may be
considered in law as one agreement, but only if the parties so
intended. Whether the parties intended that the two agreements
should be interdependent is a question of fact which turns upon
the circumstances of each case." Id. at 204, citing Lowell v.
Twin Disc, Inc., 527 F.2d 767, 769-70 (2d Cir. 1975). Accord
Rudman v. Cowles Communications, Inc., 30 N.Y.2d 1, 330
N YS.2d 33, 42, 280 N.E.2d 867 (1972).
Rabobank argues that because it was not a party to the
Offering Memorandum, Grantor Trust Agreement, and Surety Bond,
these agreements cannot be considered interdependent with the
Loan Agreement, Security Agreement or Pledge Agreement.
Although a variation in parties among several documents may
argue against considering them as interdependent, it does not,
as a matter of law, prohibit them from being so found.
Nat'l Union Fire, 892 F.2d at 204 citing Rudman, 330 N.Y.S.2d
at 42, 280 N.E.2d at 873. The fact that all of the documents at
issue took effect on the same day, December 21, 1984, supports
the argument that the separate documents may be considered
interdependent. Lowell, 527 F.2d at 769.
Rabobank also claims that because NNIC cannot produce an
executed copy of the Grantor Trust Agreement, there is no
evidence that there are two separate agreements at all. It
points out that because provisions in the Pledge Agreement and
the Security Agreement do not square with the terms of the
Offering Memorandum and Grantor Trust Agreement, NNIC's
argument must fail. These arguments point to the necessity for
third party discovery.
In essence, whether Rabobank properly applied the Beefmasters
funds boils down to the intent of the parties to the financing
transaction. Questions of intent are usually inappropriate for
disposition on summary judgment. Wechsler v. Steinberg,
733 F.2d 1054, 1058-1059 (2d Cir. 1984). Accordingly, the motion
for summary judgment on Rabobank's first claim is denied.
2. Rabobank's claim for $87,412.50
Rabobank also moves for summary judgment on its claim for
$87,412.50, representing the amount due on the final quarterly
interest payments under the Investor Notes.
The interest provision in each of the Investor Notes dated
December 21, 1984, states that:
Maker also promises to pay to order of Payee
interest computed from the date hereof on the
unpaid principal balance hereof, payable quarterly
commencing on the first day of the first calendar
quarter after the date hereof and ending on the
sixth anniversary of the date hereof or maturity,
if earlier, at a rate of 13 1/2 per cent per
Under the plain language of this clause, interest was to be
computed beginning on "the date hereof," December 21, 1984,
continuing until "the sixth anniversary of the date hereof,"
December 21, 1990, and payable quarterly beginning on January
1, 1985. Thus, the final payment of interest was calculated as
of December 21, 1990, but Rabobank did not consider it payable
until January 1, 1991. Rabobank's notice of default letter of
January 20, 1991, stated precisely that "an interest payment
under each of the [Investor] Notes was due on January 1, 1991."
Jones Aff., Exh. 11.
NNIC argues that under the interest provision of the Notes,
all payments were to end "on the sixth anniversary of the date
hereof," i.e. on December 21, 1990. Because this last interest
payment was not stated as due until January 1, 1991, NNIC
argues that this final payment does not fall within the
coverage of the Surety Bond.
The object of contract interpretation is to give effect to
the expressed intentions of the parties. Hunt Ltd. v.
Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir.
1989). Contract language whose meaning is otherwise plain does
not become ambiguous merely because the parties urge different
interpretations in the litigation. Id. Despite the efforts of
NNIC to obfuscate the meaning of the interest clause in the
Investor Notes, the intention behind it is clear. The Investors
were to make payments of interest calculated beginning December
21, 1984, but not payable until the first day of the following
calendar quarter. The only reasonable interpretation of the
clause is that the final payment of interest was computed as of
December 21, 1990, but payable on January 1, 1991. NNIC's claim
that it was responsible for all interest payments under the
Investor Notes except for the final one exceeds the limits of
Accordingly, Rabobank's motion for summary judgment on its
claim for $87,412.50 is granted.
For the reasons stated above, Defendant's motion to stay this
action is denied. Plaintiff's motion for summary judgment is
granted in part and denied in part. Discovery by deposition of
the parties and of third parties shall commence immediately and
must be completed by January 15, 1992. A pre-trial order must
be submitted by January 24, 1992. All counsel are ordered to
attend a trial conference on February 3, 1992 at 9:00 a.m. in
IT IS SO ORDERED.