United States District Court, N.D. Alabama, Southern Division
MICHAEL PUTNAM, UNITED STATES MAGISTRATE JUDGE
matter is before the court on the “Offensive Motion for
Summary Judgment” on Count I of its counterclaims by
Jones Utility and Contracting Company (“Jones
Utility” or “Counterclaimant”), filed on
September 14, 2018.(Doc. 89). The counterclaimant seeks
summary judgment against Mandy Powrzanas
(“Counter-defendant” or “Powrzanas”)
on Jones Utility's claim seeking to collect on a
promissory note signed by her to evidence a loan from Jones
Utility to Powrzanas for the purpose of enabling her to buy
shares of stock in a new business, Karma Construction, Inc.
Oral argument was heard on December 11, 2018. The matter has
been fully briefed, and the parties have unanimously
consented to the exercise of dispositive jurisdiction by a
United States Magistrate Judge in accordance with 28 U.S.C.
§ 636(c). (Doc. 15). The court has considered all of the
evidence and arguments set forth by both parties.
Federal Rule of Civil Procedure 56(a), summary judgment is
proper “if the movant shows that 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 asking for summary judgment “always bears the
initial responsibility of informing the district court of the
basis for its motion, and identifying those portions of
‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any' which it believes demonstrate the
absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 47 U.S. 317, 323 (1986)
(quoting former Fed.R.Civ.P. 56(c)). The movant can meet this
burden by presenting evidence showing there is no dispute of
material fact or by showing that the nonmoving party has
failed to present evidence in support of some element of its
case on which it bears the ultimate burden of proof.
Celotex, 477 U.S. at 322-23. There is no
requirement, however, “that the moving party support
its motion with affidavits or other similar materials
negating the opponent's claim.”
Id. at 323.
the moving party has met its burden, Rule 56 “requires
the nonmoving party to go beyond the pleadings and by her own
affidavits, or by the ‘depositions, answers to
interrogatories, and admissions on file,' designate
‘specific facts showing that there is a genuine issue
for trial.'” Id. at 324 (quoting former
Fed.R.Civ.P. 56(e)). The nonmoving party need not present
evidence in a form necessary for admission at trial; however,
he may not merely rest on his pleadings. Celotex,
477 U.S. at 324. “[T]he plain language of Rule 56(c)
mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial.”
Id. at 322.
the nonmovant has properly responded to a proper motion for
summary judgment, the court “shall” grant the
motion if there is no genuine issue of material fact, and the
moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). The substantive law will identify which
facts are material and which are irrelevant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute
is genuine “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Id. at 248. “[T]he judge's function is not
himself to weigh the evidence and determine the truth of the
matter but to determine whether there is a genuine issue for
trial.” Id. at 246. His guide is the same
standard necessary to direct a verdict: “whether the
evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Id. at
251-52; see also Bill Johnson's Restaurants, Inc. v.
N.L.R.B., 461 U.S. 731, 745 n. 11 (1983).
the nonmoving party “must do more than simply show that
there is some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). The evidence
supporting a claim must be “substantial, ”
Marcus v. St. Paul Fire and Marine Ins. Co., 651
F.2d 379 (5th Cir., Unit B, 1981); a mere scintilla of
evidence is not enough to create a genuine issue of fact.
Young v. City of Palm Bay, 358 F.3d 859, 860 (11th
Cir. 2004); Kesinger ex rel. Estate of Kesinger v.
Herrington, 381 F.3d 1243, 1249-50 (11th Cir. 2004). If
the non-movant's evidence is so thoroughly discredited by
the rest of the record evidence that no reasonable
jury could accept it, the evidence fails to establish the
existence of a genuine issue of fact requiring a jury
determination. See Scott v. Harris, 550 U.S. 372,
127 S.Ct. 1769, 1776, 167 L.Ed.2d 686 (2007)
(“Respondent's version of events is so utterly
discredited by the record that no reasonable jury could have
believed him. The Court of Appeals should not have relied on
such visible fiction; it should have reviewed the facts in
the light depicted by the videotape.”); Lewis v.
City of West Palm Beach, Fla., 561 F.3d 1288, 1290 n. 3
(11th Cir. 2009). If the evidence is merely colorable, or is
not significantly probative, summary judgment may be granted.
Anderson, 477 U.S. at 249 (citations omitted);
accord Spence v. Zimmerman, 873 F.2d 256 (11th Cir.
1989). Furthermore, the court must “view the evidence
presented through the prism of the substantive evidentiary
burden, ” so there must be sufficient evidence on which
the jury could reasonably find for the nonmovant.
Anderson, 477 U.S. at 255. The non-movant need not
be given the benefit of every inference but only of every
reasonable inference. Brown v. City of Clewiston,
848 F.2d 1534, 1540 n. 12 (11th Cir. 1988).
purposes of the instant motion for summary judgment, all
facts are construed in favor of the nonmovant, which in this
instance is Counter-defendant Powrzanas. The following facts,
so construed, are relevant for the purposes of summary
judgment. Most of the facts are undisputed; therefore, for
the purposes of clarity, the facts as written in the body of
the text will largely be the facts according to and construed
in favor of Powrzanas. Where appropriate to note a
disagreement, the court will indicate the conflicting version
of the facts in a footnote.
April 20, 2011, Powrzanas signed a promissory note evidencing
a loan from Jones Utility to her for the purpose of enabling
her to purchase her shares of stock in starting a new
business called Karma Construction, Inc. Powrzanas disputes
that it was a real loan, but later admitted in deposition
testimony that the document was “intended” to
evidence a loan because such was required by the Alabama
Department of Transportation for Karma Construction to be
considered a Disadvantaged Business Enterprise (DBE). To
date, Powrzanas has not repaid any amount to Jones Utility in
connection with the promissory note.
promissory note evidences a loan from Jones Utility to Mandy
Powrzanas for the initial capital contribution to Karma
Construction, Inc. Powrzanas was going to own 22% of the
shares of Karma Construction as a result of her $66,
capital contribution. The term of the note was 60 months,
with interest accruing at the rate of 3% per annum. The note
provided that, during the 60-month term, payments on the note
would be due and paid only out of distributions from Karma
Construction, but that the entire balance of the loan would
be due on occurrence of a default, or on April 20, 2016, as a
final balloon payment. The document contains an integration
clause, as follows:
19. ENTIRE AGREEMENT. This Note and the Pledge and Security
Agreement by and between Debtor and Lender, dated as of the
Effective Date, are the entire understandings and agreements
between Debtor and Lender regarding their subject matter and
supersedes all prior and contemporaneous understandings and
agreements regarding their subject matter.
Note, Doc. 90-2).
and Enforceability of the Note
the plain reading of the document, Powrzanas disputes that
there was ever a real loan. Rather, she testified in her
deposition that the loan documents were a sham and part of a
conspiracy, in which she participated, to commit a fraud
against the Birmingham Water Works Board and the Alabama
Department of Transportation. She testified that her father
and the owner of Jones Utility, Ricky Jones, orchestrated the
creation of Karma Construction in order to comply with the
Birmingham Water Works Board's requirements that 30% of
the work performed under its contracts be subcontracted out
to minority-owned businesses (in this instance, a women-owned
business) and to get contracts set aside of disadvantaged
businesses. However, for Karma to be certified as a
“disadvantaged business entity, ” or “DBE,
” by the Alabama Department of Transportation, the
start-up funds could not be a gift from a non-DBE firm.
Hence, according to Powrzanas, the documents were intended to
serve as proof that the funds from Jones Utility were not a
gift, but a loan. Additionally, the loan documents were
intended to hold accountable one of the Karma shareholders,
Geniece Dancy (“Dancy”), because she had a
history of poor business acumen and needed to be held
“accountable” for the success or failure of the
business. However, Powrzanas testified that there was never
any obligation for her to pay back the funds because it was
not a true loan, but merely “paperwork” to comply
with the ALDOT requirement.
date that she signed the documents, Powrzanas, Dancy, and
Powrzanas's mother and sister went to Jones Utility and
signed the documents. The documents were prepared by a lawyer
engaged by Powrzanas (see Counterclaimant's Ex.
7, Doc. 106-1), and with whom she actively participated and
consulted on some of the substantive terms. (See
Counterclaimant's Ex. 8, Doc. 106-2 and Ex. 9, Doc.
106-3). She has stated that neither she nor anyone else
present read the documents prior to signing them because it
was understood that it was not a real loan that she had any
obligation to repay. Powrzanas also argues that the only
reason her father is now seeking to collect on the promissory
note is because she filed an EEOC charge and a lawsuit for
discrimination against Jones Utility. She argues that the
sham nature of the note is further evidenced by the fact that
Jones Utility did not collect against Dancy, but allowed her
to surrender ...