Gordon Cummins and Richard Bizzaro v. 1st Source Bank (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Feb 14 2019, 8:41 am
court except for the purpose of establishing
CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
estoppel, or the law of the case. and Tax Court
ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEE
Adam J. Sedia Jeffery A. Johnson
Hoeppner, Wagner & Evans, LLP Hilary R. Johnson
Merrillville, Indiana May Oberfell Lorber
Mishawaka, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Gordon Cummins and Richard February 14, 2019
Bizzaro, Court of Appeals Case No.
Appellants-Defendants, 18A-PL-911
Appeal from the St. Joseph Circuit
v. Court
1st Source Bank, The Honorable John E. Broden,
Judge
Appellee-Plaintiff
Trial Court Cause No.
71C01-1708-PL-263
May, Judge.
[1] Gordon Cummins and Richard Bizzaro (collectively, “Appellants”) appeal the
trial court’s entry of summary judgment in favor of 1st Source Bank (“Bank”).
Appellants present two issues:
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1) Whether the trial court erred when it entered summary
judgment against Bizzaro as to liability under the guaranty
despite Bizzaro’s designation of evidence supporting his
denial that he executed the guaranty; and
2) Whether the trial court erred when it entered summary
judgment as to damages because Bizzaro and Cummins
created a genuine issue of material fact regarding the
reasonableness of Bank’s efforts to mitigate the damages.
We affirm in part, 1 reverse in part, and remand.
Facts and Procedural History
[2] On March 7, 2017, All Resort Coach, Inc. (“All Resort”) entered into an
agreement (“Lease”) with Bank to lease a “2017 Freightliner Turtle Top
Odyssey XL 31 Passenger” bus (“Bus”). (App. Vol. II at 115.) Bizzaro, on
behalf of All Resort, signed the “Master Equipment Lease Agreement[,]” (id. at
106), and the “Equipment Lease Supplement – TRAC[.]” (Id. at 111.) To
secure the amounts due under the Lease, Appellants in their individual
capacities each separately signed a “Guaranty of Payment.” (Id. at 21, 23.)
Both guaranties provided the signatory would “unconditionally guarantee[ ] to
Bank the full and prompt payment and performance when due of all
Obligations due and to become due to Bank.” (Id. at 21, 23.)
1
Cummins does not challenge the trial court’s entry of summary judgment against him as to liability. We
accordingly summarily affirm the trial court’s ruling as to Cummins’ liability.
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[3] On April 28, 2017, All Resort filed for bankruptcy. All Resort defaulted on the
Lease. On August 2, 2017, Bank sent notice to Appellants the Lease account
was in default. Bank also sent a “Demand and Acceleration Notice” to
Appellants informing them the “remaining unpaid lease balance and
indebtedness . . . [were] immediately due and payable[.]” (Id. at 25.) The
amount due, “as of August 14, 2017[, was] $216,660.83.” (Id.) Appellants did
not cure the default.
[4] In the Bankruptcy Court, Bank filed a “Motion to Terminate the Automatic
Stay or For Adequate Protection.” (Id. at 100.) Therein, Bank requested the
Bankruptcy Court “terminate the automatic stay to allow [Bank] to exercise its
rights in the Bus as an Owner and Lessor, including the right to recover
possession of the Bus and to terminate the Debtor’s leasehold interest.” (Id. at
103.) The Bankruptcy Court granted Bank’s motion. Bank repossessed Bus
and advertised it for sale. Bank received three offers for Bus and sold it to the
highest bidder for $137,500.
[5] Bank filed a complaint seeking to enforce the guaranties signed by Appellants.
On September 29, 2017, Bank filed a motion for summary judgment but it was
denied for failure to follow local rules. On October 30, 2017, Appellants filed
an answer and a motion to extend their time to respond to the motion for
summary judgment. The trial court granted Appellants’ motion and vacated its
denial of Bank’s motion for summary judgment. On November 30, 2017,
Appellants filed their response to Bank’s motion for summary judgment. Both
Appellants and Bank designated evidence.
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[6] As to liability under the guaranty, Appellants contended neither had a “specific
recollection” of signing the guaranty paperwork. (App. Vol. II at 69, 96, 98.)
Bizzaro further asserted his signature was “not in fact [his] signature, but a
stamped signature [and he] did not sign the alleged guaranty, nor did [he] stamp
his signature . . . and [he did] not recall ever giving anyone authorization to sign
or stamp [his] signature on any guaranty to 1st Source.” (Id. at 99.)
[7] Then, as to damages, Appellants contended Bank had not properly mitigated its
damages. Appellants designated evidence Bus had been appraised to have a
value between $229,200 to $234,200. Appellants both asserted, based on their
“long experience in the transportation industry . . . buses do not depreciate
upon sale or lease in the same immediate way that personal vehicles do.” (Id.
at 70, 97, 99.)
[8] On January 24, 2018, the trial court held a hearing wherein counsel for both
parties presented argument based on the designated evidence. The trial court
concluded:
6. The Court FINDS that the issue of [Bank’s] obligation
under the law to mitigate its damages is moot as [Bank] did
indeed sell the bus and apply all the relevant sales proceeds to the
debt owed by [Appellants].
7. Turning next to [Appellants’] assertion that they do not
recall signing the guaranties in question or do not recall
authorizing the use of a signature stamp, the Court finds the case
of Harper v. Kampschaefer, 549 N.E.2d 1067 (Ind. Ct. App. 1990)
to be persuasive. The Court in Harper held that “a plaintiff’s
testimony that she could not recall a discussion regarding the
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existence of a dangerous condition does not ‘contradict’ other
deponents’ testimony establishing that such a discussion
occurred.” Harper, at 1070.
8. In the present case, the Court FINDS that [Appellants’]
hazy memories about whether or not they signed or authorized
the signing of the absolute guaranties are not sufficient to
contradict or create a question of fact in regard to the authenticity
of the documents attached to [Bank’s] Complaint evidencing the
existence of [Appellants’] signatures on the absolute guaranties.
(Id. at 198) (emphasis in original).
[9] The trial court granted Bank’s motion for summary judgment and found
Appellants to be “obligated to 1st Source Bank, jointly and severally, with
respect to their unconditional Guaranties of Payment in the sum of One
Hundred Nine Thousand One Hundred Nineteen and 32/100 Dollars
($109,119.32), plus interest, expenses, and attorneys’ fees.” (Appealed Order at
1.)
Discussion and Decision
[10] Our standard of review for summary judgment is well-established:
We review summary judgment de novo, applying the same
standard as the trial court: “Drawing all reasonable inferences in
favor of . . . the non-moving parties, summary judgment is
appropriate ‘if the designated evidentiary matter shows that there
is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.’” Williams v.
Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
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fact is ‘material’ if its resolution would affect the outcome of the
case, and an issue is ‘genuine’ if a trier of fact is required to
resolve the parties’ differing accounts of the truth, or if the
undisputed material facts support conflicting reasonable
inferences.” Id. (internal citations omitted).
The initial burden is on the summary-judgment movant to
“demonstrate the absence of any genuine issue of fact as to a
determinative issue,” at which point the burden shifts to the non-
movant to “come forward with contrary evidence” showing an
issue for the trier of fact. Id. at 761-62 (internal quotation marks
and substitution omitted). And “[a]lthough the non-moving
party has the burden on appeal of persuading us that the grant of
summary judgment was erroneous, we carefully assess the trial
court’s decision to ensure that he was not improperly denied his
day in court.” McSwane v. Bloomington Hosp. & Healthcare Sys.,
916 N.E.2d 906, 909-10 (Ind. 2009) (internal quotation marks
omitted).
Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Therefore, for the trial court
to properly grant summary judgment, the movants must have “made a prima
facie showing that their designated evidence negated an element of the
nonmovants’ claims, and, in response, the nonmovants must have failed to
designate evidence to establish a genuine issue of material fact.” Cox v.
Mayerstein-Burnell Co., Inc., 19 N.E.3d 799, 804 (Ind. Ct. App. 2014). We will
affirm a trial court’s decision on summary judgment if it is sustainable on any
theory or basis found in the evidentiary matter designated to the trial court.
United Rural Elec. Membership Corp. v. Ind. Mich. Power Co., 648 N.E.2d 1194,
1196 (Ind. Ct. App. 1995), trans. denied.
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[11] At issue here are guaranties that appear to be signed by Appellants in their
individual capacities to secure the lease for All Resort. A guaranty is defined as
“an undertaking by a guarantor to answer for payment of some debt, or
performance of some contract, of another person in the event of default.” 38
Am. Jur. 2d Guaranty § 1 (2019). A guaranty is “a conditional promise to pay
because the guarantor promises to pay only on the condition that the principal
debtor fails to pay and is immediately enforceable if that event occurs.” Id.
[12] “The rules governing the interpretation and construction of contracts generally
apply to the interpretation and construction of a guaranty contract.” S-Mart,
Inc. v. Sweetwater Coffee Co., 744 N.E.2d 580, 585 (Ind. Ct. App. 2001), trans.
denied. The guarantor’s liability is determined by the terms of the contract. Id.The terms of a guaranty should neither be so narrowly
interpreted as to frustrate the obvious intent of the parties, nor so
loosely interpreted as to relieve the guarantor of a liability fairly
within its terms. The contract of a guarantor is to be construed
based upon the intent of the parties, which is ascertained from
the instrument itself read in light of the surrounding
circumstances.
Id. at 585-86 (internal citations omitted).
[13] Here, the trial court granted summary judgment in favor of Bank because it
found Appellants had executed unconditional guaranties, Bank’s “obligation
under the law to mitigate its damages [wa]s moot as [Bank] did indeed sell the
bus and apply all the relevant sales proceeds to the debt[,]” (App. Vol. II at
198), and Appellants’ “hazy memories[,]” (id.), did not create a question of fact.
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Signatures
[14] Bizzaro contends a genuine issue of material fact exists as to whether he had
signed the guaranty. A signature on a written instrument is “deemed to be
established and the instrument, if otherwise admissible, shall be deemed
admitted into evidence in the action without proving its execution unless
execution be denied under oath in the responsive pleading or by an affidavit[.]”
T.R. 9.2(B) (emphasis added). “Trial Rule 9.2 does not conclusively establish
the genuineness of a signature.” Miller v. NBD Bank, N.A., 701 N.E.2d 282, 285
(Ind. Ct. App. 1998). It merely establishes the instrument and deems it
admitted if the signature is not denied. T.R. 9.2(B). Therefore, Bizzaro’s
signature on the guaranty instrument is admissible without further proof that he
signed it, provided he does not deny doing so. However, Bizzaro did deny
signing it and designated an affidavit to that effect.
[15] Affidavits designated at summary judgment “shall 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.” Ind. Trial Rule 56(E). Bizzaro submitted an affidavit, with his
brief in opposition to Bank’s motion for summary judgment, denying his
signature on the guaranty.
[16] Bank asserts Bizzaro, in his affidavit, merely states he did not recall affixing, or
causing to have affixed, his signature to the guaranty and that such a statement
“was not a denial under oath.” (Br. of Appellee at 13.) However, Bizzaro filed
an affidavit denying not just his memory of signing the guaranty but also
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alleging he “did not sign the alleged guaranty, nor did [he] stamp [his] signature
on the alleged guaranty, and [he] do[es] not recall ever giving anyone
authorization to sign or stamp [his] signature on any guaranty to 1st Source.”
(App. Vol. II at 99.)
[17] A “perfunctory and self-serving” affidavit is enough to overcome a motion for
summary judgment if the affidavit presents sufficient evidence “to raise a
factual issue to be resolved at trial.” Hughley, 15 N.E.3d at 1004. While Bank
may have further evidence to dispute Bizzaro’s account, the evidence Bizzaro
designated is sufficient to overcome summary judgment. See Miller, 701 N.E.2d
at 287 (questions regarding the genuineness of a signature, even if affidavits are
presented that could lead one to doubt that genuineness, are a question of fact
for the fact-finder). Accordingly, we reverse the grant of summary judgment to
the Bank as to Bizzaro’s liability under the guaranty, and we remand for further
proceedings as to the authenticity of Bizzaro’s signature on the document.
Mitigation
[18] Appellants also challenge the trial court’s entry of summary judgment for Bank
as to the amount of damages due to Bank under the guaranty. Appellants assert
Bank was required to mitigate its damages in the same manner it would have
been required to do if collecting from All Resort and Bank did not reasonably
mitigate damages because Bank sold Bus for approximately $100,000 less than
its appraised value.
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[19] Bank counters that it has no duty to mitigate its damages because Appellants
signed unconditional guaranties. 2 Bank concedes, however, that it did attempt
to mitigate damages by regaining possession of Bus from the bankruptcy
proceedings and selling it “in a commercially reasonable manner.” (Br. of
Appellees at 11.)
[20] The trial court determined that, regardless whether Bank had a duty to mitigate,
Bank did in fact attempt to mitigate damages. A duty to exercise care and skill
may be imposed on one who, by affirmative conduct, assumes to act, even
gratuitously, for another. Masick v. McColly Realtors, Inc., 858 N.E.2d 682, 692
(Ind. Ct. App. 2006). The actor must specifically undertake to perform the task
he is charged with having performed negligently, for without actual assumption
of the undertaking there can be no correlative legal duty to perform the
undertaking carefully. Id. In other words, the assumption of a duty creates a
special relationship between the parties and a corresponding duty to act in a
reasonably prudent manner. Id. The existence and extent of such duty are
ordinarily questions for the trier of fact, but when there is no genuine issue of
material fact, assumption of a duty may be determined as a matter of law. Id.2
Bank cites Kruse v. Nat’l Bank of Indianapolis, 815 N.E.2d 137 (Ind. Ct. App. 2004), in support of its assertion
that it has no duty to mitigate damages. To be sure, the Kruse panel did state Kruse “ha[d] not raised a
genuine issue of material fact as to [National Bank of Indianapolis’] failure to mitigate damages[,]” id. at 151,
but we found no legal holding therein about a creditor not having a duty regarding mitigation. Rather, the
panel restated Kruse’s argument that a creditor does not have to “attempt collection from the principal debtor
before looking to the guarantor.” Id. at 150 (quoting McEntire v. Indiana Nat’l Bank, 471 N.E.2d 1216, 1223
(Ind. Ct. App. 1984), reh’g denied, trans. denied). Thereafter, the panel held Kruse had “failed to designate any
evidence to factually support his assertion that NBI did not attempt to mitigate its damages.” Id. Therefore,
Kruse is unpersuasive as to the issue for which Bank cites it.
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[21] Here, although Bank asserts it did not have a duty to mitigate, it, in fact,
undertook steps to mitigate its damages. Bank accordingly either had or
assumed a “duty to exercise care and skill.” See id. Accordingly, Bank had an
obligation to act reasonably when mitigating damages, see id., and “[a] party’s
reasonableness in mitigating damages is a question for the trier of fact[.]”
Fischer v. Heymann, 12 N.E.3d 867, 870 (Ind. 2014), reh’g denied. Appellants
designated evidence wherein they asserted the value of the bus was between
$229,200 to $234,200. Appellants contend Bank did not act reasonably when it
sold the bus for $137,500. This contention is enough to create a genuine issue
of material fact as to whether Bank acted reasonably in its mitigation efforts.
See id. Therefore, the trial court erred when it entered summary judgment for
Bank on the issue of damages.
Conclusion
[22] Because the designation of Bizzaro’s affidavit offering an alternate version of
the facts is sufficient to defeat summary judgment as to Bizzaro, we reverse and
remand for the trial court to conduct a trial as to Bizzaro’s liability under the
guaranty. Cummins has not asserted an argument on appeal as to his liability
under the guaranty, such that the trial court’s summary judgment to Bank on
that issue stands. Appellants’ designation of evidence created a genuine issue of
material fact regarding the damages due under the guaranty because, regardless
whether Bank had a duty to mitigate damages, Bank assumed the duty and was
required to do so in a reasonable manner. Accordingly, we affirm the entry of
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summary judgment for liability against Cummins, reverse the entry of summary
judgment for liability against Bizzaro, reverse the entry of summary judgment
as to damages against Appellants, and remand to the trial court for proceedings
consistent with this opinion.
[23] Affirmed in part, reversed in part, and remanded.
Baker, J., and Robb, J., concur.
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