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Longview Equity Fund, LP v. Mcandrew

January 23, 2007

LONGVIEW EQUITY FUND, LP, AND LONGVIEW FUND LP, PLAINTIFFS,
v.
WILLARD G. MCANDREW, III, DEFENDANT.



The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Plaintiffs Longview Equity Fund, LP ("Longview Equity") and Longview Fund LP ("Longview Fund") move for summary judgment in this action to enforce two notes (the "Notes") executed by defendant Willard G. McAndrew, III. Defendant cross-moves for summary judgment, and moves in the alternative for a transfer of venue or a stay pursuant to the Bankruptcy Code. Plaintiffs' motion will be granted, and defendant's motions will be denied.

BACKGROUND

The facts of this case are undisputed, except where otherwise noted. In December 2005, defendant was the Chief Executive Officer of Energy & Engine Technology Corporation (EETC). On December 6, 2005, Longview Equity made a loan in the principal sum of $250,000 to McAndrew. (As will be discussed below, McAndrew argues that the loan was actually to EETC.) The loan was evidenced by a note executed by McAndrew in his own name, with a maturity date of February 6, 2005. (Benz Aff. Ex. A.) The money has not been paid back.

Also on December 6, 2005, Longview Fund lent McAndrew an identical sum, evidenced by an identical Note with the same maturity date of February 6, 2005. (Benz Aff. Ex. B.) Again, McAndrew argues that the loan was actually for EETC, and again the money has not been paid back.

Plaintiffs commenced this action in New York State Supreme Court on April 27, 2006, by filing a Motion for Summary Judgment in Lieu of Complaint. On June 7, 2006, defendant removed that action to federal court. The parties now cross-move for summary judgment, and defendant moves in the alternative for a transfer of venue or a stay pursuant to the Bankruptcy Code. In essence, plaintiff argues that defendant simply defaulted on the Notes, while defendant offers a list of defenses, all of which are meritless as a matter of law.

DISCUSSION

I. Summary Judgment Standard

When adjudicating a motion for summary judgment, all ambiguities must be resolved in favor of the nonmoving party, although "the nonmoving party may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Summary judgment is appropriate where "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 a judgment as a matter of law." Fed. R. Civ. P. 56(c). The court "is not to weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments." Weyant v. Okst, 101 F.3d 845, 854 (2d Cir. 1996).

To establish a genuine issue of material fact, the party opposing summary judgment "must produce specific facts indicating that a genuine factual issue exists." Scotto, 143 F.3d at 114 (internal citations and quotation marks omitted). "If the evidence [produced by the nonmoving party] is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (internal citations omitted). "The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Pocchia v. NYNEX Corp., 81 F.3d 275, 277 (2d Cir. 1996), quoting Liberty Lobby, 477 U.S. at 252.

II. Waiver

Defendant's first argument is that plaintiffs took two actions that effectively waived their right to enforce the Notes against him. First, he argues that plaintiffs waived their right to enforce the Notes when they filed a petition in the United States Bankruptcy Court for the District of Nevada (Colson Reply Aff. Ex. G) to force EETC into involuntary bankruptcy partly on the basis of the Notes. (D. Opp. Mem. 6.) Plaintiffs argue that the involuntary petition was not based on the Notes, but on other obligations on which EETC had defaulted. (P. Reply 9; Colson Reply Aff. ¶ 8 & Ex. G.) Even if plaintiffs acted to recover on the Notes from EETC, however, this does not necessarily constitute an act inconsistent with recovery from McAndrew.

"Waiver requires the voluntary and intentional abandonment of a known right which, but for the waiver, would have been enforceable." General Motors Acceptance Corp. v. Clifton-Fine Cent. School Dist., 85 N.Y.2d 232, 236 (1995). The plaintiffs acted to enforce the Notes against EETC on the understanding that EETC had guaranteed the Notes. McAndrew, acting on behalf of EETC, executed a Guaranty Agreement with the plaintiffs under which EETC guaranteed the Notes.*fn1 (Coleson Opp. Aff. Ex. A.) Under the guaranty agreement, McAndrew as borrower and EETC as guarantor were jointly and severally liable on the debt. There is therefore no inconsistency in acting to enforce the Notes against both parties.

Defendant cites no law to suggest that enforcing a debt against a guarantor waives the right to proceed against the borrower. Indeed, the guaranty agreement provided that "a separate action or actions may be brought and prosecuted against Guarantor to enforce [Guarantor's] obligations, irrespective of whether any action is brought against Borrower." (Id.) Because the guaranty agreement provides for joint and several liability (id.), defendant's argument ...


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