Opinion
99 CIV. 11252 (SAS)
May 23, 2000
Samuel Feldman, Esq., Orloff, Lowenbach, Stifelman Siegel, P.A. Roseland, NJ, For Banco Popular North America.
Eugene S. Atwell, Austin, TX, for Eugene Atwell (pro se).
OPINION AND ORDER
Plaintiff Banco Popular North America ("Banco Popular") loaned $290,000 to defendants Austin Bagel Company, L.L.C. ("Austin Bagel") and Eugene Atwell. Defendants eventually stopped making their monthly payments on the loan, and plaintiff sued for compensatory damages, interest, attorney's fees and costs, replevin, and injunctive relief. Plaintiff moves for summary judgment against Atwell, who is appearing pro se, and declaratory judgment against Austin Bagel, a defaulting defendant. Neither defendant responded to plaintiff's motion. For the reasons set forth below, plaintiff's motion for summary judgment against Atwell and default judgment against Austin Bagel is granted.
I. FACTS AND PROCEDURAL HISTORY
Banco Popular is a bank organized and existing under the laws of the State of New York. See Rule 56.1 Statement submitted by Banco Popular ("Rule 56.1 Statement") ¶ 1. Austin Bagel is a limited liability company organized and existing under the laws of the State of Texas; Eugene Atwell is a citizen of Texas. See Id. ¶¶ 2, 3.
Austin Bagel executed a Note, dated as of September 25, 1997, in the sum of $290,000. See id. ¶ 4. Under the Note, Austin Bagel agreed to pay $4,851.89 on the first day of each month, from October 1997 through April 2001, with the remaining principal and all accrued interest due and payable on the maturity date of April 14, 2001. See id. ¶ 5. The Note provided that all sums would be due and payable immediately, if any required payment was not made within ten days of its due date.See id.
To secure the obligation evidenced by the Note, Austin Bagel executed a Security Agreement, dated as of September 25, 1997, which granted Banco Popular a security interest in certain collateral. See id. ¶ 6. As part of the Security Agreement, Austin Bagel agreed to pay on demand any expenses incurred by Banco Popular in enforcing the provisions of the Note. See Security Agreement, Ex. B to Verification of Stephen L. Auerbach, a workout officer at Banco Popular ("Auerbach Verification"). In addition, Austin Bagel waived any objections to venue in any state or federal court in the State of New York. See Id.
As further security for the obligation evidenced by the Note, Austin Bagel executed an Assignment of Contracts, Licenses, Permits and Agreements (the "Assignment"), dated as of September 25, 1997, in which Austin Bagel assigned to Banco Popular all of its rights, privileges and interests in and to certain agreements, licenses and permits. See Rule 56.1 Statement ¶ 8. The subject matter of the Assignment was a suite in a shopping center in Austin, Texas. See Assignment, Ex. D to Auerbach Verification.
Finally, as further security for the obligation evidenced by the Note, Atwell, a principal of Austin Bagel, executed a Guarantee of Payment (the "Guarantee"), dated as of September 25, 1997, in which Atwell guaranteed payment of all sums owed by Austin Bagel under the Note and Security Agreement. See Rule 56.1 Statement ¶ 9. As part of the Guarantee Agreement, Atwell agreed to pay all expenses incurred by Banco Popular in enforcing the Note and Security Agreement. See Guarantee, Ex. E to Auerbach Verification. Atwell also waived any objections to venue in the Southern District of New York. See id.
Austin Bagel failed to make the payment due on May 1, 1999. See Rule 56.1 Statement ¶ 10. On September 30, 1999, Banco Popular accelerated the amount due under the Note, and demanded payment from Austin Bagel under the Security Agreement and from Atwell under the Guarantee. See Id. ¶ 11. Neither defendant has made any payments. See id. ¶ 12.
On November 12, 1999, Banco Popular filed suit in the Southern District of New York, seeking compensatory damages, interest, attorney's fees and costs, replevin, and injunctive relief. On January 4, 2000, Atwell filed an answer pro se, purporting to represent both himself and Austin Bagel. I held a conference on January 12, 2000, at which I informed Atwell that Austin Bagel could not appear pro se. See Transcript of January 12, 2000 Conference ("Jan. 12 Tr.") at 2 ("The corporate defendant, Austin Bagel, cannot appear pro se. Our rules do not permit a corporation to appear pro se."). At that conference, Atwell admitted that he owed Banco Popular approximately $250,000. See id. at 2-4; see also Answer ¶¶ 1, 3. Unfortunately, the parties were unable to set a payment schedule, and Banco Popular was forced to move for summary judgment against Atwell and declaratory judgment against Austin Bagel.
II. DISCUSSION
A. Liability
Banco Popular moves for summary judgment against Atwell, who did not respond. A motion for summary judgment may be granted only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); accord Chertkova v. Connecticut General Life Ins. Co., 92 F.3d 81, 86 (2nd Cir. 1996). The moving party has the burden of identifying the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Schwapp v. Town of Avon, 118 F.3d 106, 110 (2d Cir. 1997). In determining whether summary judgment should be granted, the court must resolve all ambiguities and draw all reasonable inferences against the moving party. See D'Amico v. City of New York, 132 F.3d 145, 148 (2nd Cir. 1998), cert. denied, 524 U.S. 911 (1998).
Atwell admits that the Guarantee obligates him to pay Banco Popular according to the terms of the Note and Security Agreement. See Jan. 12 Tr. at 3-4. In his Answer, however, Atwell moved this Court to dismiss for lack of subject matter jurisdiction or to transfer venue. Both motions are denied.First, subject matter jurisdiction exists based on diversity of citizenship. Banco Popular is a New York corporation and both defendants are from Texas. Second, Atwell agreed in the Guarantee to waive any objection to New York as the venue of any action by Banco Popular. See Guarantee, Ex. E to Auerbach Verification, Ex. E. There is no reason why that venue waiver should not be enforced. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 8-20 (1972) (forum selection clauses in commercial contracts should be enforced absent a strong showing to the contrary). As a result, Banco Popular is entitled to summary judgment on its claim against Atwell. See Royal Bank of Canada v. Mahrle, 818 F. Supp. 60, 62 (S.D.N.Y. 1993) ("In an action on a promissory note upon a showing of no material question concerning execution and default, summary judgment is appropriate.").
Banco Popular moves for a default judgment against Austin Bagel. In his Answer, Atwell responded both individually and on behalf of Austin Bagel. At the conference on January 12, I informed Atwell that corporations cannot appear pro se. See Jan. 12 Tr. at 2; see also Eagle Associates v. Bank of Montreal, 926 F.2d 1305, 1307-10 (2nd Cir. 1991) (holding that a layperson cannot appear on behalf of a partnership and affirming the grant of a default judgment where the partnership failed to comply with the court's order to appear with counsel). Because Austin Bagel has failed to appear with counsel, Banco Popular's motion for a default judgment against Austin Bagel is granted.
B. Relief
Banco Popular seeks a money judgment against both defendants for the following items: (1) unpaid principal in the amount of $239,234.96; (2) interest on the unpaid principal at a rate of 10.25%; and (3) late charges of $2,121.40. Banco Popular is entitled to the unpaid principal, as well as interest at a rate of 10.25%, as stated in the Note, from May 1, 1999 to the date of this Opinion and Order. Banco Popular also is entitled to post-judgment interest at the statutory rate. See 28 U.S.C. § 1961. On the other hand, because Banco Popular has provided no support for its claim of late charges, that request is denied.
Plaintiff requested interest in the amount of $21,833.97, which covers May 1, 1999 through February 24, 2000. Plaintiff indicated that the per diem rate is $68.11. Because there have been 88 additional days between February 24 and the date of this Opinion and Order, plaintiff is entitled to $5,993.68 in additional interest.
Banco Popular also seeks from both defendants a total of $3,365.58 in attorney's fees and costs. Both the Note and the Guarantee provide for recovery of costs related to the enforcement of those agreements. See Note, Ex. A. to Auerbach Verification; Guarantee, Ex. E to Auerbach Verification. Banco Popular's attorney's fees total $3,000, which represents 12 hours of work by its counsel, Samuel Feldman, at a rate of $250 per hour. See Verification of Samuel Feldman of Counsel Fees and Costs ("Feldman Verification") ¶¶ 3-5, Ex. A (invoice). In his verification, Feldman indicates that $250 per hour is his standard hourly rate, which Banco Popular is required to pay. See id. As a result, Banco Popular may recover $3,000 in attorney's fees from defendants. Feldman's affidavits also supports Banco Popular's claim for $365.58 in disbursements. See id. ¶ 4. Banco Popular may recover those costs as well.
Finally, Banco Popular seeks replevin and several forms of injunctive relief, all related to the collateral under the Security Agreement. Specifically, Banco Popular seeks a mandatory injunction: (1) directing Austin Bagel to make available to Banco Popular or its agents or designees the property constituting the collateral under the Security Agreement for purposes of effecting a private or public sale of said collateral; (2) foreclosing Banco Popular's security interest in the property constituting the collateral and ordering that the collateral be sold and that the proceeds thereof be conveyed free and clear of Austin Bagel's interest to satisfy the amount due Banco Popular; (3) directing that Austin Bagel produce to Banco Popular all records relating to the collateral and take all steps necessary to account to Banco Popular for the whereabouts of the collateral, including any proceeds; (4) restraining Austin Bagel from directly or indirectly interfering with Banco Popular's efforts to dispose of the collateral, including, but not limited to, Banco Popular's efforts to effect a private or public sale of said collateral. Finally, Banco Popular seeks an award of all costs and expenses incurred by Banco Popular in realizing or attempting to realize on the collateral.
These requests simply enable Banco Popular to secure its rights under the Security Agreement, which entitles Banco Popular to sell the collateral and requires Austin Bagel to pay Banco Popular's expenses. The Court's only reservation in granting the requested relief is that the rights of other creditors might trump Banco Popular's rights. For example, at the January 12 conference, Banco Popular indicated that it could not attach the collateral because Austin Bagel's landlord did not subordinate its landlord's lien for unpaid rent to Banco Popular's security interests. See Jan. 12 Tr. at 4-5 ("Our lien is subordinate to the landlord's lien for unpaid rent.")
Because Banco Popular's third and fourth requests for injunctive relief do not interfere with the potential rights of other creditors, those requests are granted. On the other hand, Banco Popular's request for replevin, as well as its first and second requests for injunctive relief, must be resolved in a forum that can balance the rights of all of Austin Bagel's creditors. As a result, those requests are denied.
III. CONCLUSION
For the foregoing reasons, Banco Popular's motion for summary judgment against Atwell is GRANTED and its motion for declaratory judgment against Austin Bagel is GRANTED IN PART and DENIED IN PART. The Clerk of the Court is directed to prepare a judgment and close this case.
SO ORDERED: