contends that "the amount of the Transactions insured under the Medium-Term Policy was $ 2,926, 392," because a portion of the sum owed by Comersa to Balfour was interest for which Balfour could not recover under the Medium Term Policy. Id., P 18. Accordingly, Balfour alleges, "to the extent that the [sums recovered by Eximbank from Comersa in connection with the Medium Term Policy] exceed [$ 2,926,392] they are not 'sums applicable to the insured transaction' within the meaning of Paragraph X" of the Medium Term Policy, and Eximbank and the participating insurers hold those funds "in constructive trust" for Balfour. Id.
With respect to the Master Policy, Balfour notes that the policy provides that "after reimbursement of the expenses of recovery," all recoveries must be "shared between the Insurers and the Insured. . . until the Insurers recover in full all claim payments hereunder," after which all further recoveries must be paid to the Insured. Master Policy, attached as Exhibit B to Piepul Aff., at 5. Balfour argues that insofar as the recovery made by Eximbank against Comers a exceeds claim payments (under the Master Policy) from Eximbank to Balfour by $ 94, Balfour is entitled to recover $ 94 from defendants. Amended Complaint, P 14.
Standard for Summary Judgment
Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with 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." Fed. R. Civ. P. 56(c) The Second Circuit has stated that a "moving party may obtain summary judgment by showing that little or no evidence may be found in support of the nonmoving party's case. . ." Gallo v. Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219, 1222-3 (2d Cir. 1994). The burden of proof, however, lies with the moving party and we must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. Id. The moving party must satisfy its burden of demonstrating the absence of a genuine issue of material fact, which can be done by pointing out that there is an absence of evidence to support the nonmoving party's case (and as discussed above, all ambiguities are resolved in the nonmoving party's favor). Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). The non-moving party then has the burden of coming forward with "specific facts showing that there is a genuine issue for trial," Fed. R. Civ. P. 56(e), by a "showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. at 322.
As set forth below, we find that defendant Eximbank has established that no issue of material fact exists as to plaintiff's claims against Eximbank in this action. The undisputed record in this action demonstrates that the claims asserted by Balfour in the amended complaint must be dismissed on at least three grounds. We address each basis for dismissal below.
The Assignment of Balfour's Claims to Balmac is Void
As noted supra at 5, Balfour assigned the claims asserted in this action to Balmac on January 28, 1994. The Medium Term and Master Policies, however, prohibit the assignment of any claims without the express written approval of Eximbank and the participating insurers.
Balmac does not allege that Eximbank and the participating insurers consented to the assignment of Balfour's claims to Balmac. Nor does Balmac allege that the application in the Bankruptcy Court for an order approving the assignment was served on Eximbank and the participating insurers. Indeed, defendants state that they had no notice of the application to the Bankruptcy Court. Defendant's Mem. at 7. We find, therefore, that the assignment is void under the Medium and Master Policies.
We note, moreover, that the Anti-Assignment Act provides that "a transfer or assignment of any party of a claim against the United States Government. . . may be made only after a claim is allowed, the amount of the claim is decided, and a warrant for payment of the claim has been issued." 31 U.S.C. § 3727(a),(b). Accordingly, we find that Balfour's assignment of its claims against Eximbank, an entity of the United States Government, is void under the Anti-Assignment Act as well as the insurance policies. See In re R & L Refunds, Inc., 96 Bankr. 105, 108 (Bankr. W.D. Ky. 1988) (declining to enforce assignment of claim against United States where assignment violated Anti-Assignment Act).
Balfour's Claims Ignore the Plain Meaning of the Medium Term Policy
As set forth supra at 6-8, plaintiff contends that any recovery from Comers a in excess of the claim payment made by Eximbank and the participating insurers is not a "sum applicable to the insured transaction " within the meaning of the Medium Term policy, and should be turned over to plaintiff. Amended Complaint P 18. This contention is meritless.
The Medium Term Policy defines "insured transaction " as the "sale or sales approved by the Insurers" on the "Transaction Endorsement" attached to the policy. Medium Term Policy, attached as Exhibit C to Piepul Aff., at 1. Under the Medium Term Policy and the attached transaction endorsements, Eximbank and the participating insurers agreed to insure certain credit risks incurred by Balfour in connection with several "insured transactions," or sales to Comersa. Id. Each "insured transaction" was required by the Medium Term Policy to be for a "contract price," consisting of "a cash payment on or before delivery" and a "financed portion" evidenced by a "note." Id., at 1-2. Under the Medium Term Policy, Balfour was insured for 90% of any "loss" incurred due to commercial credit risks. Id., at 1. "Loss" is defined in the policy as
"the amount of the default on a note, including interest, if any, accrued and unpaid on the note to the date of the default computed on declining balances, at the rate specified in the Transaction Endorsement, less [inter alia] any expenses saved by the insured by the non-payment of agents commissions, nonfulfillment of the contract of sale or otherwise."
Id., at 2 (emphasis in original). In light of the foregoing definitions, we find that the plain meaning of "insured transaction," as that phrase appears in the Medium Term Policy, refers to the "sale or sales approved by the Insurers" rather than the portion of the contract price that is insured under the policy, as plaintiff contends. Accordingly, the figure of $ 2,926,392, identified by plaintiff as "the amount of the Transactions insured under the Medium-Term Policy," Amended Complaint P 18, in fact constituted Balfour's "loss" under the Medium Term Policy. It is undisputed that, pursuant to the terms of the policy, Eximbank and the participating insurers paid 90% of this sum; therefore, Eximbank and the participating insurers are entitled to 90% of "any sums applicable to the insured transaction which are recovered from the buyer." Inasmuch as Balfour does not dispute that Eximbank and the participating insurers paid to it 10% of the sum recovered from Comersa in connection with the Medium Term Policy, the claims in the amended complaint relating to that policy are dismissed.
The Release and Assignment Entered Into by Balfour Bars Its Equitable Claims
The release and assignment executed by Balfour in favor of Eximbank and the participating insurers, at the time when Eximbank and the participating insurers paid Balfour's claim, provided that Balfour "assign, transfer, and set over to [Eximbank and the participating insurers]. . . all right[s], title, and interest in, to and under, and all sums of money [then] due, or to become due, to Balfour from [Comersa] under the transactions and amounts relating to the Claim, and any and all contracts, security and evidences of indebtedness relating thereto; to have and to hold the same, with full power. . . to collect and enforce the same." Release and Assignment, attached as Exhibit E to Piepul Aff., at 1. Accordingly, by the terms of this release and assignment, Eximbank and the participating insurers are entitled to all sums that Comersa owed to Balfour in connection with the transactions in which Comersa defaulted.
For all of the foregoing reasons, we grant defendant Eximbank's motion for summary judgment.
Dated: New York, New York
February 8, 1995
ALLEN G. SCHWARTZ, U.S.D.J.