American Honda Finance Corp. v. Simao

12-1738-cv (L)
Am. Honda Fin. Corp. v. Simao
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLAT E PROCEDURE 32.1 AND THIS COURT' S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED
WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DA TABASE (WITH THE NOTATION "SUMMARY ORDER" ). A PARTY
CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Thurgood Marshall United
States Courthouse, 40 Foley Square, in the City of New York, on
the 10th day of May, two thousand thirteen.
PRESENT: AMALYA L. KEARSE,
JOHN M. WALKER, JR.,
DENNY CHIN,
Circuit Judges.
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AMERICAN HONDA FINANCE CORPORATION, a
California Corporation,
Plaintiff-Counter-
Defendant-Appellee,
12-1738-cv (L)
-v.- 12-1745-cv (CON)
PHILIP J. SIMAO, V.M. PAOLOZZI IMPORTS,
INC., a New York Corporation, DBA
DealMaker at Drum Honda, AKA DealMaker
Honda of Watertown, DEALMAKER OF
POTSDAM, LLC, a New York Limited
Liability Company, DBA DealMaker Honda
of Potsdam,
Defendants-Counter-
Claimants-Appellants,
MARK v. PICARAZZI,
Defendant-Counter-
Claimant *
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FOR PLAINTIFF-COUNTER- JULIAN B. MODESTI (Teresa M.
DEFENDANT-APPELLEE: Bennett, on the brief), Menter,
Rudin & Trivelpiece, P.C.,
Syracuse, New York.
FOR DEFENDANTS-COUNTER- BRIAN J. BUTLER (Stephen A.
CLAIMANTS-APPELLANTS: Donato, Stephanie M. Campbell, on
the brief), Bond, Schoeneck &
King, PLLC, Syracuse, New York.
Appeal from the United States District Court for the
Northern District of New York (Suddaby, J.).
UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
From April 2007 through April 2008, defendants-
counter-claimants-appellants Philip J. Simao and his two Honda
dealerships, V.M. Paolozzi Imports, Inc. and DealMaker of
Potsdam, LLC (together, the "Dealerships"), entered into
inventory financing agreements with plaintiff-counter-defendant-
appellee American Honda Finance Corporation ("Honda Finance").
Simao personally guarantied these financing arrangements. As
early as December 2008, the Dealerships failed to make payments
*
The Clerk of the Court is directed to amend the caption to
conform to the above.
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in accordance with the agreements and subsequently failed to
cure the defaults. Honda Finance sued for breach of contract,
and defendants asserted various affirmative defenses and
counterclaims for breach of contract and violations of the
Automobile Dealers' Day in Court Act ("ADDCA"), 15 U.S.C. § 1221
et seq. On May 13, 2010, an Order of Seizure was returned
executed, and Honda Finance gained custody of the Dealerships'
remaining cars. Honda Finance moved for summary judgment on
December 14, 2010.
By Memorandum Decision and Order entered March 29,
2012, the district court (1) granted summary judgment in favor
of Honda Finance, (2) dismissed all counterclaims, and (3)
awarded damages in favor of Honda Finance over defendants'
objection that further discovery was needed. The district court
entered judgment accordingly on March 29, 2012, and this appeal
followed.
We assume the parties' familiarity with the underlying
facts, the procedural history of the case, and the issues on
appeal.
A. Denial of Request for Additional Discovery
We review a district court's denial of a request for
additional discovery for abuse of discretion. Gualandi v.
Adams, 385 F.3d 236, 244-45 (2d Cir. 2004). A party seeking
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additional discovery to oppose summary judgment must submit an
affidavit that demonstrates: "(1) what facts are sought and how
they are to be obtained, (2) how those facts are reasonably
expected to create a genuine issue of material fact, (3) what
effort affiant has made to obtain them, and (4) why the affiant
was unsuccessful in those efforts." Meloff v. N.Y. Life Ins.
Co., 51 F.3d 372, 375 (2d Cir. 1995) (internal quotation marks
omitted); see Fed. R. Civ. P. 56(d). Simao's affidavit, in this
respect, consists largely of conclusory allegations that
additional discovery was needed. The only detailed allegations
are with respect to pre-workout conversations with Honda Finance
representatives. Although the parties may have approached the
workout with differing assumptions, for the reasons discussed
below, those differences are irrelevant. As "the district court
has broad discretion to limit discovery in a prudential and
proportionate way," EM Ltd. v. Rep. of Argentina, 695 F.3d 201,
207 (2d Cir. 2012), we conclude that it did not abuse its
discretion by denying discovery here.
B. Summary Judgment
Turning to the merits, we review de novo a decision
granting summary judgment after construing all the evidence, and
drawing all reasonable inferences, in favor of the non-moving
party. Maraschiello v. City of Buffalo Police Dep't, 709 F.3d
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87, 92 (2d Cir. 2013). After conducting a de novo review, we
affirm for substantially the reasons outlined by the district
court in its March 29, 2012 Memorandum-Decision and Order
granting summary judgment. We add only the following:
First, the parties do not dispute that the Dealerships
failed to satisfy their payment obligations under the financing
arrangements. Defendants argue in conclusory fashion that they
were not in "default," but it is clear that assertion is based
on its waiver, estoppel, and oral modification defenses. As the
district court held, in light of the unambiguous provisions in
the contracts, which defined an event of default to include
"Failure of Dealer[ship] to make any payment under this
Agreement . . . when due and payable," these defenses fail as a
matter of law. While Honda Finance continued to provide credit
to the Dealerships in 2009 after having declared them to be in
default and then briefly considered Simao's proposal for a
workout in early 2010, Honda Finance never called off the
defaults it had declared or waived its right to exercise post-
default remedies. Furthermore, under the non-waiver clauses of
the financing and term loan agreements, any waiver of default by
Honda Finance did not also waive future defaults. Since the
Dealerships could not satisfy their payment obligations, they
were in default as soon as Honda Finance chose to so declare.
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And, in light of the notices of default sent by Honda Finance to
defendants reserving all rights related to the Dealerships'
defaults, we see nothing approaching a "clear manifestation of
an intent" to relinquish its right to declare defaults. Beth
Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J.,
Inc., 448 F.3d 573, 585 (2d Cir. 2006) (quotation omitted); see
also Bank of Am., N.A. v. William V. Schmidt Co., Inc., No. 10-
cv-4926, 2011 WL 1334844, at *7 (S.D.N.Y. Mar. 25, 2011)
(rejecting allegation that lender had waived default where it
had "consistently asserted its right to the money and repeatedly
requested that [borrower] make arrangements to resolve the
situation").
Second, once the Dealerships defaulted, Simao became
liable by operation of the guaranty agreements, and his
affirmative defenses are unavailing. Although we interpret
guaranty obligations "in the strictest manner," White Rose Food
v. Saleh, 99 N.Y.2d 589, 591 (2003), the court must first
determine "the meaning of the contract of guarantee . . .
according to the ordinary principles of contract construction,"
Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill
Lynch, Pierce, Fenner & Smith Inc., 188 F.3d 31, 34 (2d Cir.
1999) (quotation omitted). Here, the Continuing Personal
Guaranty signed by Simao on behalf of each dealership waived any
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available defenses "expressly, unconditionally and irrevocably"
and "until all indebtedness [would be] paid in full". See
Merrill Lynch, 188 F.3d at 34-36 (discussing, under New York
law, waivers in guaranty agreements). Likewise, Honda Finance
never waived its right to enforce the agreement by participating
in settlement negotiations. Rather, by the express terms of the
guaranties, its rights were preserved even if it declined to
promptly exercise them in the hope that it could work things out
with the Dealerships.
Third, Simao's argument that he only signed the
guaranties in an official capacity has no merit. Although Simao
signed certain guaranties as a "member" of the Dealerships, the
record also establishes that he signed -- in an individual
capacity -- a "Continuing Personal Guaranty" on behalf of each
dealership, which guarantied the sums owed to Honda Finance.
Thus, the fact that he signed other guaranties in a non-
individual capacity is irrelevant; his liability rests on those
guaranties that were personal to him. See, e.g., Chem. Bank v.
Haseotes, 13 F.3d 569, 573 (2d Cir. 1994) (per curiam) (noting
that a creditor may seek summary judgment if, inter alia, it can
establish "that the defendant made a guarantee of payment of [a]
debt").
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Fourth, even if we assume without deciding that Honda
Finance was an "automobile manufacturer" under the ADDCA, there
has been no showing of bad faith.1 Honda Finance provided
defendants with three notices of default, before making a demand
for immediate payment in full. It agreed to discuss a workout,
and considered (albeit briefly) a workout proposal, which was
ultimately rejected in favor of filing suit. On this record,
Honda Finance provided defendants with plenty of notice and
opportunity to cure the Dealerships' defaults, and we therefore
conclude that a reasonable jury could have only found that Honda
Finance did not act in bad faith. Hence, it cannot be liable
under the ADDCA. See 15 U.S.C. § 1222.
Finally, defendants contend that the district court's
damages award did not properly credit them for certain vehicles
allegedly seized by Honda Finance. Counsel conceded during oral
argument, however, that defendants neither raised the issue of
missing collateral nor objected to the evidence submitted by
Honda Finance in support of damages. When a party has failed to
preserve an argument in a civil action, we will entertain it
only if the alleged error is "fundamental." Shade v. Housing
1
Under the ADDCA, "[a]n automobile dealer may bring suit against
any automobile manufacturer . . . by reason of the failure of said automobile
manufacturer . . . to act in good faith" with respect to a franchise
agreement. 15 U.S.C. § 1222. For the purpose of the statute, an "automobile
manufacturer" includes a corporation "which acts for and is under the control
of [an automobile manufacturer]." Id. § 1221(a).
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Auth. of New Haven, 251 F.3d 307, 312-13 (2d Cir. 2001). "An
error is fundamental under this standard only if it is 'so
serious and flagrant that it goes to the very integrity of the
[proceedings].'" Id. at 313 (quoting Modave v. Long Island
Jewish Med. Ctr., 501 F.2d 1065, 1072 (2d Cir. 1974)). Here,
the record was not sufficiently developed to indicate that any
difference between the number of vehicles for which a seizure
order was sought in February 2010 and the number of vehicles for
which defendants were given credit after the vehicles were
actually seized in May 2010 was not warranted. Accordingly, we
conclude that defendants waived this issue below and that the
interests of justice do not warrant our consideration of it now.
We have considered defendants' remaining arguments and
conclude they are without merit. For the foregoing reasons, we
AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O'Hagan Wolfe, Clerk
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