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Sundance, LLC v. Se Property Holdings, LLC

United States District Court, Southern District of Alabama, Southern Division

May 8, 2015

SUNDANCE, LLC, et al., Plaintiffs,
v.
SE PROPERTY HOLDINGS, LLC, Defendant.

ORDER

WILLIAM H. STEELE, CHIEF UNITED STATES DISTRICT JUDGE.

This matter is before the Court on the defendant’s motion for summary judgment as to its counterclaim. (Doc. 61). The parties have filed briefs and evidentiary materials in support of their respective positions, (Docs. 62, 63, 71-73), and the motion is ripe for resolution.[1] After careful consideration, the Court concludes the motion is due to be denied.

BACKGROUND

The defendant’s predecessor (“Vision”) loaned plaintiff Sundance, LLC (“Sundance”) the principal sum of $3 million, secured by a mortgage on certain townhomes in which Sundance had an interest. The three individual plaintiffs[2] executed guaranties of the indebtedness. Litigation in this Court over the indebtedness resulted in a settlement, pursuant to the terms of which the plaintiffs agreed not to resist foreclosure against the collateral and further agreed to pay approximately $856, 000 over time. The parties’ settlement is evidenced by an agreement (“the Settlement Agreement”) and a note (“the Settlement Note”).

Seven of the townhome units serving as collateral had been constructed using Chinese drywall, and Sundance was a party to a class action lawsuit over Chinese drywall. Under the Settlement Agreement, Sundance assigned the “proceeds” of these claims to Vision, which proceeds would be applied as a credit against the balance owing under the Settlement Agreement.

Sundance executed a deed in lieu of foreclosure in favor of the defendant. The defendant thereafter sold to third parties the seven units containing Chinese drywall. The class action then settled, on terms that provided for remediation of affected properties but no cash payments.

The plaintiffs filed this action, asserting that the defendant breached the Settlement Agreement and Settlement Note by selling the seven units (at substantially reduced prices) without first obtaining remediation pursuant to the Chinese drywall litigation. The defendant moved for summary judgment on the grounds that remediation did not constitute “proceeds” under the Settlement Agreement. (Doc. 36). The Court agreed, ruling that “proceeds” are limited to money and thus granting summary judgment to the defendant on the plaintiffs’ single claim. (Docs. 51, 52).

Meanwhile, the defendant filed a counterclaim against the plaintiffs for breach of contract. (Doc. 10). The counterclaim alleges that the plaintiffs are in breach of both the Settlement Agreement and the Settlement Note. The counterclaim asserts that both documents “contain attorney’s fee provisions, ” and it demands “the attorney’s fees it will accrue in enforcing the Settlement Note and/or collecting or attempting to collect on the Settlement Note.” (Id. at 12). In its briefing, the defendant clarifies that the fees it seeks to recover are those it incurred “[a]s a result of Plaintiff’s position and filing” in this lawsuit. (Doc. 62 at 6).

DISCUSSION

Summary judgment should be granted only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The party seeking summary judgment bears “the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The moving party may meet its burden in either of two ways: (1) by “negating an element of the non-moving party’s claim”; or (2) by “point[ing] to materials on file that demonstrate that the party bearing the burden of proof at trial will not be able to meet that burden.” Id. “Even after Celotex it is never enough simply to state that the non-moving party cannot meet its burden at trial.” Id.; accord Mullins v. Crowell, 228 F.3d 1305, 1313 (11th Cir. 2000); Sammons v. Taylor, 967 F.2d 1533, 1538 (11th Cir. 1992).

“When the moving party has the burden of proof at trial, that party must show affirmatively the absence of a genuine issue of material fact: it must support its motion with credible evidence ... that would entitle it to a directed verdict if not controverted at trial. [citation omitted] In other words, the moving party must show that, on all the essential elements of its case on which it bears the burden of proof, no reasonable jury could find for the nonmoving party.” United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991) (en banc) (emphasis in original); accord Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993).

“If the party moving for summary judgment fails to discharge the initial burden, then the motion must be denied and the court need not consider what, if any, showing the non-movant has made.” Fitzpatrick, 2 F.3d at 1116; accord Mullins, 228 F.3d at 1313; Clark, 929 F.2d at 608.

“If, however, the movant carries the initial summary judgment burden ..., the responsibility then devolves upon the non-movant to show the existence of a genuine issue of material fact.” Fitzpatrick, 2 F.3d at 1116. “If the nonmoving party fails to make ‘a sufficient showing on an essential element of her case with respect to which she has the burden of proof, ’ the moving party is entitled to summary judgment.” Clark, 929 F.2d at 608 (quoting Celotex Corp. v. Catrett, 477 U.S. 317 (1986)) (footnote omitted); see also Fed. R. Civ. P. 56(e)(2) (“If a party fails to properly support an assertion of fact or fails to properly address another party’s assertion of fact as required by Rule 56(c), the court may … consider the fact undisputed for purposes of the motion ….”).

In deciding a motion for summary judgment, “[t]he evidence, and all reasonable inferences, must be viewed in the light most favorable to the nonmovant ….” McCormick v. City of ...


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