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Philips Lighting Co. v. Schneider

United States District Court, E.D. New York

August 28, 2014

PHILIPS LIGHTING COMPANY, a division of Philips Electronics North America Corporation, Plaintiff,
v.
BARRY A. SCHNEIDER, Defendant.

MEMORANDUM AND ORDER

SANDRA L. TOWNES, District Judge.

On July 2, 2014, this Court issued a memorandum and order (attached herein) denying Defendant Barry A. Schneider's second motion, pursuant to Rule 60 of the Federal Rules of Civil Procedure, to vacate this Court's order granting Plaintiff Philips Lighting Company ("Plaintiff" or "Philips") summary judgment and stay execution of judgment in connection with a 1985 agreement in which Schneider agreed to personally guarantee certain debts of Eltron Supply, Ltd. ("Eltron"). The Court reserved decision as to the amount of damages and requested further briefing because it appeared that Plaintiff pursued an inflated damages figure and the Court had not been fully apprised of amounts Plaintiff received from Eltron's bankruptcy estate in satisfaction of the debt. Having reviewed the subsequent factual submissions, the Court now grants Plaintiff's motion to modify the judgment pursuant to Rule 60(b)(5).

A. Principal Amount

This Court has already concluded that Schneider is liable on half of the debt owed by Eltron. (Dkt. 39, September 30, 2008 Order at 12.) In Plaintiff's August 1, 2014 letter to the Court, Plaintiff maintains that Eltron's debt to it is $578, 635.14. However, the evidence before the Court shows that on July 19, 2004, Plaintiff stipulated with Eltron's bankruptcy trustee that Eltron owed it $468, 635.14. ( See Dkt. 99, July 2, 2014 Order, at 23.) Although Plaintiff has omitted any mention of this stipulation from its August 1, 2014 statement on damages, the stipulation itself is in the record. (Dkt. 78-6, July 1, 2009 Lebensfeld Decl., Ex. F. Stip. signed by Plaintiff's Counsel on July 19, 2005, ¶ 1.) The Court holds Plaintiff to its stipulation. CIT Grp./Equip. Fin., Inc. v. Shapiro, 09 CIV. 409 JPO, 2013 WL 1285269, at *5 (S.D.N.Y. Mar. 29, 2013) (holding a plaintiff to a stipulation as to the reasonable value of certain equipment).

In its August 1, 2014 letter, Plaintiff admits that it received distributions in the amount of $46, 863.51 and $9, 372.70 from the Eltron bankruptcy estate, in satisfaction of Eltron's debt. Accordingly, $56, 236.21 is subtracted from the initial $468, 635.14 debt, leaving a total of $412, 398.93. Defendant is liable for half of that amount: $206, 199.47.

B. Prejudgment Interest

In its September 30, 2008 Order, this Court awarded Plaintiff prejudgment interest of 9% from October 3, 2003 through the entry of judgment, which was entered on October 10, 2008, totaling $130, 620.92. (Dkt. 40, Clerk's Judgment). Under applicable law, Plaintiff is entitled to prejudgment interest as a matter of right.[1] However, it appears that in its motion for summary judgment, Plaintiff sought pre judgment interest from February 2, 2007. (Dkt. 30-3, Plaintiff's Proposed Order.) Accordingly, the prejudgment interest award is corrected to run from the date sought by Plaintiff in its papers, February 2, 2007. Accordingly, Plaintiff is entitled, as a matter of law, to prejudgment interest of 9% per annum from February 2, 2007 until the date of entry of judgment, October 10, 2008.

C. Reasonable Attorney's Fees

In this Court's September 30, 2008 Order, Plaintiff was awarded $35, 781.54 in attorney's fees. Plaintiff now seeks an additional award of attorney's fees in the amount of $23, 974.85, for representation between October 10, 2008 through August 31, 2009. Under the March 14, 1985 Guarantee Agreement between the parties, Plaintiff is entitled to "reasonable counsel fees incurred... by reason of default in payment of [Eltron's] indebtedness." (Compl. Ex. 1.) Pursuant to this provision, the Court previously granted Plaintiff's request for attorney's fees. However, Defendant Schneider appealed, and prevailed on appeal, largely because Plaintiff sought an inflated damages figure and did not reveal to the Court that Plaintiff had received distributions from Eltron's bankruptcy estate reducing Plaintiff's debts. The additional years of litigation are attributable to Plaintiff's counsel's litigation tactics and could have been avoided if Plaintiff's counsel had been forthright with the Court. Accordingly, the additional attorney's fees sought are not "reasonable counsel fees incurred... by reason of [Eltron's] default" and the application for an additional award of attorney's fees to Plaintiff is denied. Plaintiff is entitled to $35, 781.54 in attorney's fees.

Conclusion

For the foregoing reasons, the Clerk of Court is respectfully directed to correct the October 10, 2008 judgment [Dkt. 401 as follows: Defendant, Barry A. Schneider, is liable to Philips Lighting Company in the amount of $206, 199.46, plus $35, 781.54 in attorney's fees, plus 9% interest per annum from February 2, 2007 until the date of entry of judgment, October 10, 2008.

SO ORDERED.

ORDER

This matter is currently before the Court on remand from the Second Circuit Court of Appeals. Defendant Barry A. Schneider ("Defendant" or "Schneider") has filed a second motion, pursuant to Rule 60 of the Federal Rules of Civil Procedure, to vacate this Court's order granting Plaintiff Philips Lighting Company ("Plaintiff" or "Philips") summary judgment in connection with a 1985 agreement in which Schneider agreed to personally guarantee certain debts of Eltron Supply, Ltd. ("Eltron").

BACKGROUND

I. Factual History

In 1962, Barry Schneider and his family founded Eltron, a New York corporation engaged in the business of providing national distribution of electrical products. Philips' predecessor served as one of Eltron's distributors. (Docket No. 87, Barry Deel. at ¶ 6.) Two identical agreements, dated March 14, 1985, one signed by Barry and one signed by his brother, Theodore Schneider, provide, in part:

For value received and the further consideration of any credit North American Philips Lighting Corporation (hereinafter "Oligee") may extend hereunder, (I) (We) (hereinafter "Guarantor(s)") do hereby absolutely and unconditionally guarantee the full and punctual payment to Obligee of all indebtedness which Eltron Supply Ltd. Inc.... (hereinafter "Obligor") has incurred or may incur for the purchase of merchandise from Obligee, together with all expenses of collection and reasonable counsel fees incurred by Obligee by reason of default in payment of such indebtedness. The liability of the undersigned Guarantors hereunder shall not be affected by the amount of credit extended hereunder, nor by any change in the form of said indebtedness, by note or otherwise, nor by any extension of credit hereunder, of default in payment, of change in form, of renewal or extension of any of said indebtedness, or of any matter with respect hereto, is expressly waived. This guaranty shall continue in full force and effect until such time as Obligee shall receive from the undersigned Guarantors written notice of revocation, and such revocation shall not in any way relieve the undersigned from liability for any indebtedness incurred prior to the actual receipt by Obligee of said notice.
[Philips] shall have the right to proceed against Guarators, or any of them, immediately upon default by the Obligor in payment or performance of any obligations and shall not be required to take any action or proceedings of any kind against the Obligor or any other party liable for the Obligor's debts or obligations or any security which Obligee may hold.

(Docket No. 1, Compl., Exs. 1 & 2) (hereinafter "Agreement(s)").[1]

Barry Schneider contends that in 1998, when he retired from Eltron, he conveyed all his interest in Eltron to his brother, Theodore, in return for his brother's assumption of all of Barry's obligations. (Docket No. 87, Barry Decl. at ¶¶ 7-9, ) The 1998 contract memorializing this sale provides, in its entirety:

This will confirm that Barry A. Schneider ("Seller") has this day sold to Theodore L. Schneider ("Purchaser") fifty (50) shares of common stock of Eltron Supply Ltd. (the "Corporation") represented by stock certificate No. 2 of the Corporation for the sum of one ($1.00) dollar, the receipt whereof is hereby acknowledged. Barry A. Schneider hereby resigns as an officer and as a director of the Corporation effective immediately upon the execution of this memorandum. IN WITNESS HEREOF the parties hereto have executes this memorandum as of the 3rd day of December, 1998.

(Docket No. 43-3, Rule 60 Motion, Ex. C.)

On December 16, 2002, Eltron filed for Chapter 11 Bankruptcy, (Docket No. 33, Def.'s Ex. D). Eltron owed Philips money for certain merchandise that Philips had delivered to Eltron. (Docket No. 30-2, Pl.'s 56.1 Stmt. at ¶ 4.) Accordingly, Philips was scheduled in Eltron's bankruptcy proceedings as one of Eltron's unsecured creditors. ( Id. at ¶ 16.) In its complaint dated October 7, 2005, Plaintiff sought $578, 635.14 plus interest and costs from Schneider. (Compl. at 10). In the bankruptcy, Plaintiff had settled certain preferential transfer claims with Eltron's estate and stipulated, on July 20, 2005, to seek a reduced amount, $468, 635.14, from Eltron's bankruptcy estate. (Docket No. 78-6, Philips Stipulation, at 4.) Defendant, in his Local Rule 56.1 counterstatement of undisputed facts, did "not dispute, for the purposes of this motion" (Docket No. 33-6, Def.'s 56.1 Stmt. at ¶ 5), that "[a]s of October 3, 2002, a balance was due and owing by Eltron to Plaintiff in the principal amount of $578, 635.14." (Docket No. 30-2, Pl.'s $6.1 Stmt. at ¶ 5). On July 2, 2004, the Bankruptcy Court approved Eltron's Chapter 11 reorganization plan (the "Plan"). As part of the Plan, Plaintiff was scheduled to receive distributions from Eltron; in December 2005, Plaintiff received $46, 863.51. (Docket No. 86-8, Arroyo Decl, Ex. 8.) Plaintiff received an additional $9, 372.70 in either October, (Def.'s Rule 60 Br. at 15), or July, (Pl.'s Rule 60 Opp'n at 26), of 2007.

As part of the bankruptcy proceedings, Theodore agreed to pay $400, 000 into Eltron's bankruptcy estate, and in exchange, be released from any claims that arose against him from his having been employed by and having managed Eltron. (Docket No. 33-4, Def.'s 56.1 Stmt. at ¶¶ 12-13.)

II. Procedural History

On October 11, 2005 Philips commenced this action against Schneider under the Agreement to recover on debts owed to Philips by Eltron.[1] On the advice of his father, Schneider hired John T. Brennan, Esq. to represent him in the instant action. (Docket No. 87, Barry Decl. at ¶ 20.) Brennan had represented his brother in Eltron's bankruptcy proceedings. (Docket No. 78-7, Theodore Stipulation, at 7). On March 16, 2007, Brennan, on behalf of Defendant, filed Schneider's ...


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