Opinion
CASE NO. 96-61376, Substantively Consolidated, ADV. PRO. NO. 02-80088.
October 13, 2006
HISCOCK BARCLAY, DENNIS MC COY, ESQ., Of Counsel, Attorneys for Plaintiff, Buffalo, NY.
BYRNE, COSTELLO PICKARD, P.C., TERRY R. PICKARD, ESQ., Of Counsel, Attorneys for Defendants, Syracuse, NY.
MEMORANDUM-DECISION, PROPOSED FINDINGS OF FACT, CONCLUSIONS OF LAW AND RECOMMENDATIONS
Presently under consideration by the Court are two motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."), as incorporated in Rule 7056 of the Federal Rules of Bankruptcy Procedure ("Fed.R.Bankr.P."), in the adversary proceeding commenced by Richard C. Breeden ("Plaintiff" or "Trustee") as chapter 11 trustee of The Bennett Funding Group, Inc. ("BFG") and the consolidated estates (collectively, the "Debtors") on April 11, 2002, against Erie Islands Resort Marina ("Erie Islands"), Erie Islands Resort Marina, Inc., as well as against John Gronvall ("Gronvall") and Beverly Gronvall (the "Gronvall Defendants"), collectively the "Defendants." The Trustee seeks to recover $7,870,898.95, which he asserts to be the outstanding principal balance of a note signed on behalf of Erie Islands, plus interest accrued from April 17, 1996, the date of Erie Islands' alleged breach of a Loan and Security Agreement.
The Debtors are comprised of eight related entities, including BFG, Bennett Receivables Corporation, Bennett Receivables Corporation II, Bennett Management and Development Corporation, The Processing Center, Inc., Resort Service Company, Inc., American Marine International, Ltd., and Aloha Capital Corporation. BFG filed its bankruptcy petition on March 29, 1996.
Issue was joined by the filing of an answer and counterclaim by the Defendants on May 31, 2002. On May 31, 2002, the Defendants also filed a motion for summary judgment, seeking dismissal of the complaint on the basis that the statute of limitations had expired prior to the filing of the Trustee's complaint. On January 2, 2003, the Court issued a Memorandum-Decision, Proposed Findings of Fact, Conclusions of Law and Recommendation to the U.S. District Court for the Northern District of New York. On April 28, 2003, U.S. District Court Judge David N. Hurd adopted the recommendation of this Court and denied Erie Islands' motion for summary judgment. Judge Hurd also required that the Defendants file and serve their answer on or before May 19, 2003.
Judge Hurd's decision was appealed by the Defendants to the U.S. Court of Appeals for the Second Circuit. Subsequently, on November 18, 2003, the parties stipulated to withdraw the appeal based on the fact that it was an appeal of an interlocutory decision and no certification for appeal had been granted.
Defendants apparently again filed their answer, dated May 24, 2002, along with a counterclaim, on May 19, 2003. On December 1, 2003, they filed an Amended Answer and two counterclaims in which they sought judgment in the amount of $2,440,000. By stipulation, the parties agreed that the Reply to the Defendants' counterclaim, originally filed by the Trustee on June 19, 2002 in response to the Defendants initial answer and counterclaim filed on May 31, 2002, would be deemed a Reply to the Amended Answer and Counterclaims filed by the Defendants on December 1, 2003.
The Gronvall Defendants filed their motion for partial summary judgment on October 31, 2005. In turn, the Trustee filed his motion for summary judgment on November 1, 2005. Both motions were heard at the Court's regular motion term on November 29, 2005, in Binghamton, New York. Following oral argument, the Court allowed the parties an opportunity to file memoranda of law. The matter was submitted for decision on January 11, 2006.
JURISDICTIONAL STATEMENT
The Court has non-core related to jurisdiction over the parties and subject matter of this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b), 157(a), 157(b)(3) and 157(c)(1).
FACTS
Erie Islands Resort Marina, Inc. is an Ohio corporation, which is the managing partner of Erie Islands, an Ohio general partnership. Gronvall is the President of Erie Islands Resort Marina, Inc. Beverly Gronvall is his wife.
By letter dated August 19, 1988 from Patrick Bennett ("Bennett"), Chief Financial Officer of BFG, Resort Funding, Inc. ("RFI"), a subsidiary of BFG, agreed to extend to Erie Islands a hypothecation line of credit in the amount of $20,000,000 in exchange for a security interest in purchase money mortgage receivables from the sale of undivided interests in a timeshare resort, a first mortgage on the real property and the personal guaranty of the Gronvall Defendants. See Exhibit A, attached to Gronvall Affidavit. A Loan and Security Agreement, dated September 30, 1988, twenty-five pages in length and including exhibits in excess of another twenty-five pages, was executed on behalf of RFI and Erie Islands, memorializing the provisions for the line of credit. The monies were to be available to Erie Islands to draw upon for a period of five years, or until September 30, 1993, with a minimum draw of $100,000. See Exhibit A, attached to Affidavit of Robert B. Liddell ("Liddell Affidavit"), filed November 2, 2005 (Docket No. 46) and Exhibit B, attached to the Gronvall Affidavit. Also on or about September 30, 1988, Erie Islands granted RFI an Open-Ended Mortgage, Assignment of Rents and Proceeds, and Security Agreement to secure any advances made by RFI. See Exhibit B, attached to Liddell Affidavit. In addition, on or about September 30, 1988, the Gronvall Defendants delivered to RFI their personal guarantee of the repayment of Erie Island's obligations to RFI under the 1988 Loan and Security Agreement. See Exhibit C, attached to Liddell Affidavit and Exhibit C, attached to Gronvall Affidavit.
According to Gronvall, with a hypothecation line of credit/loan, the lender advances "say 80 percent of the note amount, say it's a hundred thousand dollars [sic] note, in notes, they will advance $80,000. Then they collect the principal and interest payments stream on the entire hundred thousand." Exhibit M, attached to the Liddell Affidavit ("Gronvall Deposition") at 54.
According to the affidavit of Gronvall, the financing was obtained in connection with the development of a timeshare resort on Lake Erie at Port Clinton, Ohio. The monies were to be used to enable purchasers of an interest in the timeshare resort to finance their interests. See Affidavit of Gronvall ("Gronvall Affidavit") (Docket No. 54), sworn to on October 25, 2005, at ¶¶ 2-4.
On October 10, 1990, Erie Islands and RFI entered into an Amendment to Loan and Security Agreement, amending Articles II, III and IV. See Exhibit D attached to Liddell Affidavit. Aloha Leasing, a division of BFG, RFI and Erie Islands entered into an agreement ("Consolidation Agreement"), dated December 20, 1991, to consolidate the debt owing by Erie Islands to RFI under the terms of the 1988 Loan and Security Agreement, as well as owing to Aloha Leasing under the terms of a Master Lease Agreement, dated September 8, 1989, and under a series of other lease agreements executed on or about May 4, 1990, and later amended on or about October 10, 1990.
Aloha Leasing, a division of BFG and previously determined to be the trade name of the corporate debtor, provided third-party lease financing to Erie Islands under the terms of a Master Lease Agreement, whereby Aloha Leasing allegedly agreed to lease certain items of machinery, equipment and other personal property to Erie Islands.
The "Recitals" set forth in the Consolidation Agreement are as follows:
WHEREAS, Resort and Borrower [identified as Erie Islands] entered into a Loan Security Agreement dated September 30, 1988 which was amended on October 10, 1990 and Borrower entered into a Master Lease Agreement (the "Master Lease") on September 8, 1989 and a series of lease agreements (the "Lease Agreements") which were originally dated May 4, 1990 and amended on October 10, 1990, and
WHEREAS, the Lenders [identified as RFI and Aloha Leasing] desire to modify certain provisions of the Loan Security Agreement, the Master Lease, and the Lease Agreements, and
WHEREAS, the Lenders and the Borrower desire to consolidate the debt owing by Borrower to Lenders into a single consolidation note (the "Consolidation Note").
Id.
Under the terms of the Consolidation Agreement, the parties indicated that the line of credit was canceled, and RFI no longer had any obligation to provide further financing to Erie Islands. See Exhibit E, attached to Liddell Affidavit and Exhibit F, attached to Gronvall Affidavit. The Consolidation Agreement was executed by Gronvall on behalf of Erie Islands and also by him allegedly in an individual capacity on January 27, 1992. See id.; see also Gronvall Deposition at 43-44. The parties agreed that the outstanding principal balance due by Erie Islands under all prior agreements totaled $7,713,491.95. See Exhibit E, attached to Liddell Affidavit and Exhibit F, attached to Gronvall Affidavit. On January 27, 1992, Gronvall, on behalf of Erie Islands, executed a Consolidation Note, which indicated an amount of $9,641,864.94, and included a payment schedule beginning January 20, 1992 and ending February 20, 1999. See Exhibit F, attached to Liddell Affidavit and Exhibit G of Gronvall Affidavit.
RFI subsequently entered into a transaction with Hemlock Investors Associates ("Hemlock"), pursuant to which RFI transferred the Consolidation Note to Hemlock. On November 22, 2000, however, Hemlock entered into a Stipulation with the Trustee under which it relinquished to the Trustee its rights under the Consolidation Note. On November 28, 2000, the Court issued an Order approving this stipulation and vesting title in the Trustee.
A Mutual Release, dated December 20, 1991, was executed on behalf of RFI, Aloha Leasing, and Erie Islands. See Exhibit H, attached to Liddell Affidavit and Exhibit H attached to Gronvall Affidavit. Under the terms of the Mutual Release, the parties, which included RFI, Aloha Leasing and Erie Islands, agreed as follows:
Erie hereby releases Resort and Aloha, and Resort and Aloha hereby release Erie in regards to the Loan Security Agreement, Master Lease, Lease Agreements, and amendments and modifications thereto and in particular from all actions, causes of action, suits, debts, dues, sums of money, accounts reckoning, bonds, bills, specialties, covenants, contracts controversies . . . which against Resort, Aloha, or Erie, their subsidiaries, parent companies, predecessors, successors and assigns and all of their past, present and future officers, directors, agents, employees, and their respective heirs and legal representatives ever had, now have or hereafter can, shall or may have for and which against Erie, Resort and Aloha, their executors, successors, and assigns ever had, now have, or hereafter can, shall or may have upon by reason of any manner, cause except any obligations that the parties may have pursuant to the terms and conditions which are set forth in certain agreements, bearing even date herewith which restructured the debt obligations afore described.
Id.
According to the sworn deposition testimony of Gronvall on September 29, 2005, Erie Islands was not making payments on the Consolidation Note on a regular basis up to March 21, 1994. See Gronvall Deposition at 61. Gronvall acknowledged that beginning sometime in 1991 through and including 1995, Erie Islands had lost monies. Id. at 64. He explained that from August 20, 1993 through February 27, 1996, when the obligation "became a cash flow mortgage[,] we paid what we could afford to pay and we sent up paper, we didn't send cash, we sent receivables. Id. at 67. He characterized this as an effort "to continue making some type of good faith payment towards a consolidated note." Id. at 69. He also explained that it was his understanding that Erie Islands was to send what it could pursuant to conversations with representatives of RFI. Id. at 69-70. He acknowledged that this arrangement was not based upon what was written in the Consolidation Note, however. Id. at 70, 80. He also testified that after February 27, 1996, no further payments were made by Erie Islands. Id. at 70 and 81. He acknowledged at his deposition that once the Debtors filed for bankruptcy, Erie Islands no longer was receiving payments from the sale of the receivables to RFI and, accordingly, could no longer afford to make the payments to Hemlock. Id. at 71, 74 and 81.
BFG filed its voluntary chapter 11 petition on March 29, 1996.
According to the Trustee, on December 22, 2004, Terry Pickard, Esq., the Defendants' counsel, was served with a Notice to Admit, to which no response was served. The Defendants do not dispute this assertion by the Trustee.
The Notice to Admit contains the following statements/admissions:
Paragraph 2 — "The document attached hereto as Exhibit A [Loan and Security Agreement dated September 30, 1988] was executed by John M. Gronvall, as President of Erie Islands Resort Marina, Incorporated, Managing General Partner of Erie Islands Resort 7 Marina, an Ohio General Partnership."
Paragraph 3 — "The document attached hereto as Exhibit B is a true and accurate copy of a General Guarantee executed as of September 30, 1988 by John Gronvall and Beverly Gronvall."
Paragraph 11 — "The document attached hereto as Exhibit E [Consolidation Agreement] was executed by John Gronvall (1) on behalf of Erie Islands Resort Marina, Inc., and (2) by John Gronvall, Individually."
Paragraph 13 — "The Consolidation Note, dated December 20, 1991, attached hereto as Exhibit F, was executed by John M. Gronvall, as President of Erie Islands Resort Marina, Inc., Managing General Partner of Erie Islands Resort Marina, an Ohio General Partnership."
Paragraph 18 — "The last payment made by Erie Islands Resort Marina on the Consolidation Note was in March 1996."
Paragraph 19 — "The document attached hereto as Exhibit J is a true and accurate copy of a letter dated April 12, 1996, from Hemlock Investor Associates to Erie Islands Resort Marina.
Paragraph 20 — The letter attached hereto as Exhibit J was received by Erie Islands Resort Marina, Inc. in April 1996.
Paragraph 21 — "That by letter dated April 12, 1996, Hemlock Investor Associates provided a written notice to Erie Islands Resort Marina, stating: `Please be advised that you are in default under the terms of the loan documents, including but not limited to the Note, Loan and Security Agreement and Mortgage, by reason of your failure to have made timely payment as required under those documents.'"
Paragraph 22 — "That by letter dated April 12, 1996, Hemlock Investor Associates provided a written notice to Erie Islands Resort Marina stating: `At the option of the Note Holder, all sums thereunder have been accelerated.'"
Paragraph 23 — "That Erie Islands made no payment to Resort Funding, Inc. and/or Hemlock Investor Associates and/or any other party on the Consolidation Note after March 31, 1996."
Paragraph 24 — As of April 17, 1996, the principal balance due on the Consolidation Note was not less than $7,807,898.95."
As noted previously, on November 28, 2000, this Court approved a stipulation vesting title to the Consolidation Note in the Trustee, and on April 11, 2002, the Trustee filed his complaint against the Defendants, which is the subject of the motions for summary judgment presently under consideration.
ARGUMENTS
With respect to the Trustee's motion for summary judgment, the Defendants take exception to the Liddell Affidavit, arguing that since Liddell was not a party to any of the transactions between RFI, Aloha Leasing and Erie Islands, he has no personal knowledge on which to base his affidavit. In fact, in the Defendants' Response to [the Plaintiff's] Statement of Material Facts pursuant to Local Rule 7056-1, the Defendants dispute the Trustee's assertion that on April 12, 1996, Hemlock sent Erie Islands a Notice of Acceleration advising Erie Islands that it was in default and that it had five days in which to cure said default. See Exhibit J, attached to Liddell Affidavit. The Defendants' objection is made on the basis that Liddell has no personal knowledge concerning the letter from Hemlock, which is not a party herein. Defendants also take exception on the same grounds to the Trustee's assertion that on April 24, 1996, Hemlock commenced an action in the United States District Court for the Northern District of New York against Erie Islands, Gronvall and Erie Islands Resort Marina, Inc. See Exhibit K, attached to Liddell Affidavit. The Trustee responds that the Liddell Affidavit contains no factual assertions which require his personal knowledge. According to the Trustee, the Liddell Affidavit is simply a means by which to present the various documents in support of the Trustee's argument that he is entitled to recover from the Defendants on their obligations as a result of the acknowledged default by Erie Islands.
The Gronvall Defendants also assert that in his complaint, the Trustee did not raise the argument that Gronvall was personally liable on the obligation based on his having signed the Consolidation Agreement in his individual capacity. It is the position of the Gronvall Defendants that the Trustee is precluded from making that argument now in support of his summary judgment motion. The Gronvall Defendants also contend that the guarantee that they executed in 1988 has no relevance to the Consolidation Agreement and Consolidation Note because Aloha Leasing was not a party to the 1988 transaction for which the guarantee was granted by the Gronvall Defendants. The 1988 Loan and Security Agreement was executed on behalf of RFI and Erie Islands; whereas, the Consolidation Agreement was executed on behalf of RFI and Aloha Leasing, as well as Erie Islands.
In support of their motion for partial summary judgment, the Gronvall Defendants contend that the Consolidation Note replaced the 1988 Loan and Security Agreement. The Gronvall Defendants take the position that the Consolidation Note, signed by Gronvall on behalf of Erie Islands, contained additional obligations, including those pursuant to the Master Lease between Erie Islands and Aloha Leasing, as well as amounts due under subsequent leases between Erie Islands and Aloha Leasing, for which they provided no guarantees. The Gronvall Defendants also argue that there are no documents establishing their consent to guaranteeing the additional liability under the Consolidation Note.
The Gronvall Defendants assert that as a result of RFI's breach of the 1988 Loan and Security Agreement, RFI proposed to cancel the 1988 Loan And Security Agreement and restructure the outstanding debt. According to the Gronvall Defendants, in the process of negotiations, RFI requested that the Gronvalls provide their personal guarantees in connection with the restructured debt, which they allegedly refused to do. In support of this argument, the Gronvall Defendants have provided an unsigned and edited copy of a Memorandum of Understanding, dated October 1991, concerning terms of the debt restructuring, which they contend were proposed by RFI, as well as a letter from Bennett to Gronvall, dated December 19, 1991. See Exhibits D and E, attached to Gronvall Affidavit. With respect to the latter argument of the Gronvall Defendants, the Trustee does concede that there may be issues of fact in that regard, although the Trustee takes the position that Gronvall ratified the restructuring of the debt, as well as his prior guarantee, in signing the Consolidation Agreement in his individual capacity on January 27, 1992.
DISCUSSION
Ancillary Objections
As an initial matter, the Defendants have questioned the admissibility of the Liddell Affidavit, including the documents attached to it, since he has no personal knowledge of the transactions at issue herein as required by Fed.R.Civ.P. 56(e). In response, the Trustee asserts that the Liddell Affidavit does not set forth any facts requiring his personal knowledge. Rather, according to the Trustee, the Liddell Affidavit is simply a means for presenting the documents that support the Trustee's motion for summary judgment.
The original affidavit submitted by Liddell in November 2005 contained no jurat by a notary. The Defendants did not object to the affidavit on that basis and, therefore, arguably have waived any objection on those particular grounds. See In re Mezvinsky, 265 B.R. 681, 693 n. 19 (Bankr. E.D. Pa. 2001); Egger v. Phillips, 710 F.2d 292, 311 n. 19 (7th Cir. 1983); see also Tucker v. Rose, 955 F.Supp. 810, 814 (N.D. Ohio 1997); United States ex rel. Austin v. W. Elec. Co., 337 F.2d 568, 574-75 n. 19 (9th Cir. 1964) (holding that court properly considered technically defective affidavits submitted in connection with summary judgment motion in light of opponent's failure to object).
In Elder-Keep v. Aksamit, 460 F.3d 979 (8th Cir. 2006), the court indicated that the district court had authority to sua sponte exclude electronically-filed affidavits, which lacked signatures and attestation before a notary public and which were not executed under penalty of perjury, from consideration in connection with a summary judgment motion. Id. at 984. This Court recognizes that affidavits no longer need to be notarized and are admissible if made under penalties of perjury. See DeMars v. O'Flynn, 287 F.Supp.2d 230, 242 (W.D.N.Y. 2003). However, in this case, not only did the original affidavit lack the attestation and signature of a notary public, there also is no representation that it was sworn to under penalties of perjury. "The notary's failure to sign an affidavit is the type of defect which a court may permit to be corrected upon such terms as are just or, if a substantial right of a party is not prejudiced, [may] disregard." Supreme Automotive Mfg. Corp. v. Continental Cas. Co., 97 A.D.2d 700 (N.Y.App.Div. 1983). On September 29, 2006, in response to the Court's request for a copy of the original affidavit, which had been electronically filed, Liddell provided the Court with an affidavit containing the same representations and signed by a notary on that date. The Court notes that the documents attached to the Liddell Affidavit are substantially the same documents provided by the Defendants in support of their motion. The Court concludes that under the circumstances, it will not sua sponte exclude the Liddell Affidavit for the above reasons but will consider the arguments made by the Defendants concerning its admissibility in connection with the Trustee's motion for summary judgment.
"Affidavits submitted in support of or in opposition to the summary judgment motion must `be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.'" Patterson v. County of Oneida, 375 F.3d 206, 219 (2d Cir. 2004), citing Fed.R.Civ.P. 56(e). However, the requirement of "personal knowledge" with respect to an affidavit of an attorney submitted in support of a motion for summary judgment does not necessarily preclude its consideration by the Court. See Morrison v. Blitz, Case No. 88 CIV. 5607, 1995 WL 679259, at *2 (S.D.N.Y. Nov. 15, 1995), citing Sitts v. United States, 811 F.2d 736, 741 (2d Cir. 1987). As the court in Morrison noted, "it may be enough if the affiant has personally reviewed the relevant documents." To the extent that the Liddell Affidavit serves merely as a vehicle for the introduction of admissible documents, some of which are the very same documents that the Gronvall Defendants have submitted in support of their motion, the Court will allow its limited consideration. However, to the extent that it sets forth any factual assertions for which Liddell has no personal knowledge, the Court will not consider it.
The next issue concerns the Trustee's argument that when determining whether the Gronvall Defendants are liable on the debt, the Court give consideration to the fact that Gronvall signed the Consolidation Agreement in both his representative capacity on behalf of Erie Islands, as well as in his individual capacity. The Gronvall Defendants contend that because that argument was not asserted in the Trustee's complaint, he should be precluded from making it in the context of his summary judgment motion, as well as in opposition to their motion.
In federal litigation, under the concept of "notice pleading," it is unnecessary that a plaintiff articulate the precise legal theories upon which the plaintiff bases his right to recovery. DeNovellis v. Shalala, 124 F.3d 298, 310 n. 6 (1st Cir. 1997); Flickinger v. Harold C. Brown Co., Inc., 947 F.2d 595, 600 (2d Cir. 1991). The complaint must simply provide notice of the plaintiff's claim and the grounds on which it rests. Shalala at 310 n. 6. In this case, the Trustee has presented the factual allegations which he contends establish the liability of the Defendants, including the Gronvall Defendants. Furthermore, the Court would point out that a plaintiff is also entitled to seek to amend its complaint if necessary. Greenidge v. Allstate Ins. Co., 446 F.3d 356, 361 (2d Cir. 2006).
The Trustee's complaint alleges that Erie Islands' failure to make the payment demanded in Hemlock's April 12, 1996 notice of default was a breach of the Loan and Security Agreement executed in 1988. It is also the Trustee's position that the Loan and Security Agreement, as later amended in October 1990, was incorporated in the Consolidation Agreement, dated December 20, 1991. According to the Trustee, the fact that the Consolidation Agreement was signed by Gronvall in his individual capacity, as well as on behalf of Erie Islands, as evidenced by the document itself, and Gronvall's failure to respond to the Trustee's Notice to Admit, provides additional support for the Trustee's contention that the Gronvalls, as well as Erie Islands and Erie Islands Resort Marina, Inc., are liable for any debt which arose as a result of the alleged breach. Summary Judgment
Paragraph 11 of the Notice to admit states that [the Consolidation Agreement] "was executed by John Gronvall (1) on behalf of Erie Islands Resort Marina, Inc., and (2) by John Gronvall, individually. Fed.R.Civ.P. 36(b), incorporated by reference in Fed.R.Bankr.P. 7036 "[a]ny matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission." Pursuant to Fed.R.Civ.P. 36, such admissions, even when made upon a party's default in responding, may be used as a basis for summary judgment as long as the facts deemed admitted are dispositive of the case. See Donovan v. Carls Drugs Co., Inc., 703 F.2d 650, 651 (2d Cir. 1983), rejected on other grounds by McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133-34 n. 10 (1988); Rivers Elec. Co., Inc. v. 4.6 Acres of Land located in the Town of Catskill, County of Greene, 1991 WL 255374 at *3 (N.D.N.Y. Nov. 25, 1991).
The moving party seeking summary judgment must establish that there is no genuine issue as to any material fact, thus entitling the movant to judgment as a matter of law. A genuine issue exists only when "the evidence is such that a reasonable [trier of fact] could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); see also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (movant need only illustrate by reference to record opponent's failure to introduce evidence in support of essential element of its claim). It is the role of the Court on such a motion to determine whether there are issues of fact to be tried; it is not the role of the Court to try the issues of fact. See Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9 (2d Cir. 1983) (citation omitted).
Official Committee of Unsecured Creditors of Matco Electronics Group, Inc. v. American Board Companies (In re Matco Electronics Group, Inc.), Case No. 02-60835-44, Adv. Pro. No. 02-80085, slip op. at 17-18 (Bankr. N.D.N.Y. April 4, 2003). Thus, the court is not to weigh the evidence, assess its probative value, or decide factual issues in the context of the motion for summary judgment. Furthermore, in considering a motion for summary judgment, the court must "view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor, and may grant summary judgment only when no reasonable trier of fact could find in favor of the nonmoving party." Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995) (citation and quotation marks omitted). In addition, the Court notes that the principles concerning admissibility of evidence remain the same on a motion for summary judgment as they would at trial. See Raskin v. Wyatt Co., 125 F.3d 55, 66 (2d Cir. 1997).
The moving party bears the initial responsibility of identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrates the absence of a genuine issue of material fact and entitles it to summary judgment. Celotex, 477 U.S. at 323. In this case, there are two motions under consideration. Accordingly, the Court must consider each independently of one another. See Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993).
In support of his motion for summary judgment, the Trustee has offered the deposition of Gronvall, dated September 29, 2005, in which Gronvall, as President of Erie Islands Resort Marina, Inc., the managing partner of Erie Islands, acknowledged that after February 27, 1996, no payments were made by Erie Islands. See Exhibit M, attached to Liddell Affidavit, at 70 and 81. Gronvall also is deemed to have admitted the same by failing to respond to the Trustee's Notice to Admit. See Notice to Admit at ¶ 18, in which he admits that the last payment by Erie Islands on the Consolidation Note was in March 1996. There is nothing in the record to challenge the liability of either of the Erie Islands entities under the Consolidation Note, which under its terms incorporates the Loan and Security Agreement. Accordingly, the Court recommends that the Trustee's motion for summary judgment against Erie Islands Resort Marina, Inc. and Erie Islands be granted.
With respect to the Gronvalls' liability under the Consolidation Note, there are several issues of fact that warrant denial of the Trustee's motion. Admittedly, the Gronvalls were liable personally for the obligations that arose under the terms of the 1988 Loan and Security Agreement by virtue of their execution of the General Guaranty on or about September 30, 1988. There is a question, however, regarding whether they are personally liable for the restructured debt owed to not only RFI, but also to Aloha Leasing, based on Gronvall's signature in his individual capacity on the Consolidation Agreement. There is also a question of fact regarding whether, as the Gronvalls contend, they were released from their guarantee on the obligations under the Loan and Security Agreement by virtue of the Mutual Release, dated December 20, 1991. Accordingly, the Court recommends that the Trustee's motion seeking summary judgment with respect to the Gronvall Defendants be denied. In addition, the Court recommends that the Gronvall Defendants' motion seeking partial summary judgment be denied for the same reasons.
Based on the foregoing, it is hereby
RECOMMENDED to the United States District Court for the Northern District of New York pursuant to 28 U.S.C. § 157(c)(1) that the Trustee's motion for summary judgment be granted with respect to Erie Islands Resort Marina and Erie Islands Resort Marina, Inc. and be denied with respect to John and Beverly Gronvall; and it is further
RECOMMENDED that the motion of the Gronvall Defendants for partial summary judgment be denied.