United States District Court, E.D. New York
June 24, 2005.
EQ TRANSPORTATION, INC., Plaintiff,
TNT TRANSPORTATION, INC., STEVEN M. JENSEN and THOMAS H. SCHNEIDER, JR., Defendants.
The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge
MEMORANDUM AND ORDER
Pending before the Court is the summary judgment motion of
plaintiff EQ Transportation, Inc. ("plaintiff" or "EQ"). EQ
asserts that defendant TNT Transportation, Inc. ("TNT") defaulted
on the terms of a lease agreement between the parties, and that
defendants Steven M. Jensen ("Jensen") and Thomas H. Schneider
("Schneider") defaulted on guaranties they signed in connection
with that lease (collectively, TNT, Jensen and Schneider are
referred to as "defendants"). In opposition, defendants concede
that they breached the respective agreements, but argue that
there is a fact issue as to the amount of damages EQ suffered.
For the reasons set forth below, plaintiff's motion for summary
judgment is granted in its entirety.
EQ is a Delaware corporation with its principal place of
business in Connecticut. (Plaintiff's Statement of Undisputed
Facts Pursuant to Rule 56.1 of the Local Civil Rules for the
Eastern District of New York ("Pl. Rule 56.1 Statement") ¶ 1). EQ
is the beneficial interest holder in Conseco Finance Leasing
Trust f/k/a Green Tree. (Id. ¶ 10). TNT is a New York
corporation with an office located in Staten Island, New York. (Id. ¶ 2). Jensen and Schneider are both
residents of Staten Island, New York. (Id. ¶¶ 3, 4).
On or about February 13, 1998, TNT, as lessee, entered into a
master vehicle lease agreement, as amended from time to time
(collectively, the "Lease Agreement"), with Green Tree Leasing
Trust ("Green Tree"), as lessor. (Pl. Rule 56.1 Statement ¶ 9).
Pursuant to the Lease Agreement, TNT leased certain vehicles from
Green Tree in return for an agreed upon payment schedule.
(Id.). The Lease Agreement states that time is of the essence
"with respect to all payments and other obligations of" TNT.
(Affidavit of Ellen Miller sworn to February 1, 2005 ("Miller
Aff.") Exh. A ¶ 3). An "event of default" as that term is defined
in the Lease Agreement includes TNT's failure to make a timely
lease payment. (Id. ¶ 13). Upon such an occurrence, EQ is
entitled to, inter alia, liquidated damages computed at a
rate specified in the Lease Agreement. (Id. ¶ 14). In addition,
in the "event of default," TNT is required to pay all of EQ's
costs and expenses incurred in enforcing the Lease Agreement,
including attorneys' fees. (Id. ¶ 15). In its discretion, EQ
may sell any or all of the vehicles which are returned or
repossessed under the terms of the Lease Agreement. (Id. ¶ 14).
The Lease Agreement is to be interpreted according to Minnesota
law. (Id. ¶ 16).
In order to induce EQ to enter into the Lease Agreement, both
Jensen and Schneider signed unconditional personal guaranties
(collectively, the "guaranties") pursuant to which they agreed to
pay without condition any money which TNT owed under the Lease
Agreement. (Miller Aff. Exh. B). In addition, the guaranties
state that, if necessary, they would pay the costs of collection,
including reasonable attorneys' fees and expenses, in the event
that TNT failed to make timely payment under the Lease Agreement
and an action needed to be commenced against them. (Id.). The
guaranties are to be interpreted according to Minnesota law.
(Id.). On March 1, 2003, TNT defaulted under the terms of the Lease
Agreement by, among other things, failing to make timely payments
to EQ. (Pl. Rule 56.1 Statement ¶ 11). EQ put TNT on notice of
its default, but TNT has at all times refused to make payment of
the money due under the Lease Agreement. (Id. ¶ 12). Jensen and
Schneider have also failed to make the required payments due to
EQ under the Lease Agreement and guaranties. (Id. ¶ 26). As of
December 3, 2004, EQ is owed no less than $1,027,965.57 from TNT,
Jensen and Schneider, plus interest, attorneys' fees, late
charges and other charges which continue to accrue. (Id. ¶ 27).
EQ filed the complaint in this matter on December 30, 2004
seeking to collect the money defendants owe it. This motion
A. The Summary Judgment Standard and the Significance of
Defendants' Failure to Submit a Counter-Statement of Disputed
Federal Rule of Civil Procedure 56(c) provides that summary
judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits . . . show that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." A genuine issue as to a
material fact exists when there is sufficient evidence favoring
the nonmoving party such that a jury could return a verdict in
its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986). Therefore, the nonmoving party "may not rest upon the
mere allegations or denials" of its pleadings; rather, its
response must go beyond the pleadings to "set forth specific
facts showing that there is a genuine issue for trial."
Fed.R.Civ.P. 56(e); see also Celotex Corp. v. Catrett,
477 U.S. 317, 324 (1986). However, when evaluating a motion for summary
judgment, "[t]he courts must view the evidence in the light most
favorable to the party against whom summary judgment is sought
and must draw all reasonable inferences in his favor." L.B.
Foster Co. v. American Piles, Inc., 138 F.3d 81, 87 (2d Cir.
1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)). Local Civil Rule 56.1 for the Eastern District of New York
provides that "papers opposing . . . summary judgment . . . shall
include a separate, short and concise statement of the material
facts as to which it is contended there exists a genuine issue to
be tried." Local Civil Rule 56.1(b). Here, plaintiff submitted a
statement of material, undisputed facts. Defendants, however,
failed to submit a counter statement of disputed material facts
in opposition to plaintiff's motion for summary judgment.
According to Local Civil Rule 56.1(c), "[e]ach numbered paragraph
in the statement of material facts required to be served by the
moving party will be deemed to be admitted for purposes of the
motion unless specifically controverted by a correspondingly
numbered paragraph in the statement required to be served by the
opposing party." Accordingly, plaintiff's statement of undisputed
facts must be and is "deemed to be admitted." Local Civil Rule
56.1(c); see also Dusanenko v. Maloney, 726 F.2d 82, 84 (2d
Cir. 1984) (finding that facts set forth in movant's statement of
undisputed facts were properly deemed admitted where the
nonmovant failed to serve any opposing statement);
Gallimore-Wright v. Long Island Railroad Co.,
354 F. Supp. 2d 478, 483 (S.D.N.Y. 2005) (those facts asserted by defendant, in
its statement of material facts annexed to its motion for summary
judgment, to which plaintiff completely failed to respond, or
responded only by asserting that facts stated were not relevant,
would be deemed admitted). Among other things that defendants
admit, therefore, is that as of "December 3, 2004, there is due
and owing and payable to EQ from TNT, Jensen and Schneider, no
les[s] than the sum of $1,027,965.57, plus interest, attorneys'
fees, late charges and other charges, all of which continue to
accrue." (Pl. Rule 56.1 Statement ¶ 27).
In this regard, defendants cannot raise disputed issues of fact
through "mere conclusory allegations or denials in legal
memoranda" because they "are not evidence." Fletcher v. Atex,
Inc., 68 F.3d 1451, 1456 (2d Cir. 1995) (internal quotation
marks and citations omitted). Therefore, defendants' statement in their brief that material issues of fact preclude
the grant of summary judgment to plaintiff for the damages it
seeks is irrelevant to the Court's determination. Moreover, a
touchstone for the admissibility of documents on a summary
judgment motion is personal knowledge such that the "affiant is
competent to testify to the matters stated therein." Fed.R. Civ.
P. 56(e). Here, Marc Lederer, defendants' counsel, seeks to
introduce evidence of the market value of the vehicles which TNT
returned to EQ under the terms of the Lease Agreement, and which
EQ subsequently sold. (See Affidavit of Marc Lederer sworn to
March 2005 Exh. A.). This is not competent evidence because there
is nothing in Mr. Lederer's affidavit which reflects that he has
any personal knowledge of the information he seeks to introduce
into evidence. See generally Commercial Data Servers, Inc.
v. International Business Machines Corp., 262 F. Supp. 2d 50, 59
(S.D.N.Y. 2003). Accordingly, the Court is precluded from
considering this portion of Mr. Lederer's affidavit. See,
e.g., H. Sand & Co., Inc. v. Airtemp Corp., 934 F.2d 450,
454-55 (2d Cir. 1991) (documents submitted in opposition to
summary judgment motion must be presented by an affiant with
personal knowledge and must be authenticated to be admissible).
B. Is There A Disputed Issue of Fact on The Amount of
Defendants concede in their opposition papers that they have
failed to tender full payment to EQ of the amount due and owing
under the terms of the Lease Agreement and guaranties, and
therefore they are in breach of each of them. Their argument in
opposition to plaintiff's summary judgment motion, based "upon
[their] research of the fair market value of the vehicles"
returned by TNT and resold by EQ after TNT breached the Lease
Agreement (and guaranties), is that the "resale amounts" are "far
below the fair market value of the vehicles," and therefore there
is an issue of fact concerning the amount of plaintiff's damages.
(Affidavit of Steven M. Jensen sworn to March 2, 2005). As
discussed above, defendants' argument fails as a threshold matter because they have not introduced any
admissible evidence to support their position. Moreover,
defendants' assertions are conclusory and not predicated on any
Even if the Court were to consider Mr. Lederer's submission
consisting of a comparison between the "fair market value" and
"the actual sale [price]" by plaintiff of the leased vehicles
returned by TNT upon its default, defendants still fail to raise
a material issue of fact preventing the grant of summary judgment
to plaintiff. In essence, defendants argue that because EQ did
not obtain the best possible price for the vehicles,*fn1 the
sale was not commercially reasonable. This argument finds no
support in the law. A secured party, as EQ here, seeking a deficiency judgment,
must dispose of collateral in a commercially reasonable
manner.*fn2 Karlstad State Bank v. Fritsche,
374 N.W.2d 177, 181 (Minn.App. 1985); Minn. Stat. § 336.9-610(b) (the sale
may be public or private, but every aspect of the disposition
including the method, manner, time, place and terms must be
commercially reasonable). The statute further states that the
secured party may sell the collateral "in its present condition."
Id. § 336.9-610(a). Plaintiff has submitted undisputed evidence
that the vehicles returned by TNT were in a "distressed and worn
condition," as many if not all of the buses required new tires,
batteries and extensive body repair, suffered other mechanical
problems, and had missing equipment, including VCR's, microphones
and fire extinguishers. (Ciralli Aff. ¶¶ 8, 9 & Exh. 2).
Moreover, EQ took several steps to resell the vehicles at the
highest price, including placing them in advertisements in at
least one trade journal. (Id. ¶ 13). To the extent that the
buses were sold below "market value," moreover, that resulted
from a glut of them being sold at the same time that EQ sold the
vehicles at issue in this case. (Id. ¶ 19). EQ, therefore, has
made a prima facie showing that the sale of the vehicles was
reasonable. Against this background, summary judgment is appropriate
because defendants have failed to come forward with specific
evidence of commercial unreasonableness. See, e.g., Ford
Motor Credit Co. v. Russell, 519 N.W.2d 460, 465 (Minn.App.
1994). Allegations that a better price could theoretically have
been obtained through, among other things, a different method of
sale, are insufficient to raise a factual issue as to commercial
reasonableness.*fn3 See Minn. Stat. § 336.9-627(a); see
also Fedders Corp. v. Taylor, 473 F. Supp. 961, 973 (D. Minn.
1979). This is what defendants improvidently argue through their
submissions which are supported only by data derived from Kelly's
blue book. Accordingly, defendants have failed to raise a genuine
issue of material fact on the issue of the amount of plaintiff's
For the foregoing reasons, plaintiff's motion for summary
judgment is granted in its entirety. Within twenty days of entry
of this Memorandum and Order, plaintiff's counsel is directed to
submit to Chambers a proposed judgment and all necessary
documentation in support thereof, including but not limited to,
an affirmation attaching itemized statements indicating the legal
services that he rendered to his client, a condition precedent to
obtaining attorneys' fees in this Circuit. See New York State
Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136,
1147 (2d Cir. 1983).