Powrzanas v. Jones Utility And Contracting Co. Inc.

          MEMORANDUM OPINION

          T. MICHAEL PUTNAM, UNITED STATES MAGISTRATE JUDGE

         This 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.^[1](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.

         SUMMARY JUDGMENT STANDARD

         Under 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.

         Once 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.

         After 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).

         However, 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).

         SUMMARY JUDGMENT FACTS

         For the 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.

         On 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^[2]

         The 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, 000^[3] 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.^[4] 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.

         (Promissory Note, Doc. 90-2).

         Effect and Enforceability of the Note^[5]

         Despite 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.

         On the 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 ...