Opinion
No. CV00 0176877 S
April 4, 2001
MEMORANDUM OF DECISION RE: MOTION FOR SUMMARY JUDGMENT #123
On November 16, 2000, the plaintiff; Bruce Waller, filed a motion for summary judgment in this collection action on the ground that he is entitled to judgment as a matter of law because he is a holder in due course of an overdue promissory note for which the defendants, Bluewater (MB) Limited Partnership (Bluewater), Talon Group, Inc., Bluewater Management Corp., Frank D. Palmer and Gilbert J. deBottom (collectively, the defendants), are liable, either directly or as guarantors. In opposition, the defendants argue that there are genuine issues of material fact in dispute, including: (1) whether the plaintiff as the payee of the promissory note is a holder in due course; (2) whether the plaintiff's execution of a pledge and security agreement prevents him from demanding payment; and (3) whether the plaintiff's refusal, as a limited partner of Bluewater, to consent to additional financing prevents him from demanding payment on the note. The parties have filed memoranda of law, documentary exhibits and affidavits in support of their respective positions.
A motion for summary judgment shall be granted "if the pleadings, affidavits and any other proof submitted show 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." (Internal quotation marks omitted.) Miles v. Foley, 253 Conn. 381, 385, 752 A.2d 503 (2000). "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Citations omitted; internal quotation marks omitted.) Appleton v. Board of Education, 254 Conn. 205, 209, 757 A.2d 1059 (2000).
In an affidavit submitted in support of his motion for summary judgment, the plaintiff attests that on or about April 16, 1998, in exchange for a $300,000 loan made by the plaintiff to Bluewater, Bluewater executed a promissory note payable to the plaintiff. (Plaintiff's Affidavit #125, ¶¶ 4, 5.) The plaintiff attests that on the same date, on or about April 16, 1998, the plaintiff became a limited partner of the defendant Bluewater, holding a 40% interest in the company. (Plaintiff's Affidavit #125, ¶¶ 13, 14.) The plaintiff further attests that on or about August 14, 1998, the plaintiff entered into a pledge and security agreement (pledge) with Amresco Commercial Finance, Inc. (Amresco), a company that had agreed to loan an amount exceeding eleven million dollars to Bluewater. (Plaintiff's Affidavit #125, ¶ 18) Finally, the plaintiff attests that by executing the pledge, the plaintiff did not transfer any portion of his personal interest in the promissory note to Amresco but rather, the plaintiff granted Amresco a lien and an interest in the plaintiff's partnership interest in Bluewater. (Plaintiff's Affidavit #125, ¶¶ 20; see also Plaintiff's Exh. E.)
Amresco Commercial Finance, Inc. (Amresco), is not a party in this action.
The defendants, in turn, assert that as part of the consideration for the plaintiff's $300,000 loan which is reflected in the promissory note, the plaintiff was made a 40% limited partner of Bluewater. (Defendants' memorandum, Exh. C: Palmer Affidavit ¶ 2.) The defendants assert that Bluewater financed a development project with a loan from Amresco. (Defendants' memorandum, Exh. C: Palmer Affidavit ¶ 4.) The defendants contend, however, that in connection with and as security for the loan from Amresco, the plaintiff, as a limited partner of Bluewater, assigned, transferred, pledged and conveyed to Amresco all of the plaintiff's rights, title and interest in the promissory note underlying the $300,000 loan. (Defendants' memorandum, Exh. C: Palmer Affidavit ¶ 5; see also Plaintiff's Exh. E.) Thus, the defendants argue that the language of the pledge instrument encompasses the promissory note and, at the very least, creates a question of fact as to whether the promissory note was pledged to Amresco as collateral.
defendants rely on the following provisions of the pledge in support of their argument that the plaintiff pledged his interest in the promissory note as collateral to Amresco:
"(a) As collateral security for the [s]ecured [i]ndebtedness, [the plaintiff] hereby pledges and grants to [Amresco] a first priority lien on and security interest in and to, and agrees and acknowledges that [Amresco] has and shall continue to have, a security interest in and to, and collaterally assigns, transfers, pledges and conveys to [Amresco], all of [the plaintiff's] right, title and interest in and to the following described collateral . . . now owned or hereafter acquired, wherever located, howsoever arising or created, and whether now existing or hereafter arising, existing or created:
(i) the [p]ledged [p]artnership [i]nterests and all rights of [the plaintiff] with respect thereto and all proceeds, income and profits therefrom;
(ii) all of [the plaintiff's] distribution rights, income rights, liquidation interest, accounts, contract rights, general intangibles, notes, instruments, drafts and documents relating to the [p]ledged [p]artnership [i]nterests;
(iii) to the extent distributed on or with respect to the [p]ledged [p]artnership [i]nterests all promissory notes, notes receivable, accounts, accounts receivable and instruments owned or held by [the plaintiff] or, in which [the plaintiff] owns or holds an interest, evidencing obligations of [Bluewater];
(iv) all [l]iens, security interests, collateral, property and assetssecuring any of the promissory notes, notes receivable, instruments, accounts receivable and other claims and interests described in clause (iii) above. . . ." (Emphasis added.) (Defendants' memorandum, pp. 8-9; see also Plaintiff's Exh. E., Article II. Section 2.1, pp. 2-3.)
Furthermore, the defendants rely on the following provision in the pledge, in which the defendants assert that the plaintiff empowered Amresco with broad authority in respect to the promissory note:
"[The plaintiff] hereby irrevocably appoints [Amresco], and its successors and assigns, the true and lawful attorney-in-fact of [the plaintiff], with full power of substitution, in the name of [the plaintiff], for the sole use and benefit of[Amresco], . . . to the extent permitted by [l]aw to exercise, . . . at any time or from time to time following the occurrence and during the continuance of an [e]vent of [d]efault, all or any of the following powers with respect to all or any of the [c]ollateral:
"(a) to ask, demand, sue for, collect, receive and give acquittance and receipts for any and all monies due or to become due upon by virtue thereof,
(b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) preceding;
(c) to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto;
(d) subject to [s]ection 5.4 hereof, to sell, transfer, assign or otherwise deal in or with the same or the proceeds thereof as fully and effectually as if [Amresco] were the absolute owner thereof, and
(e) to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference there to. . . ." (Defendants' memorandum, pp. 9-10; see also Plaintiff's Exh. E., Article IV. Section 5.3, p. 7.)
"The general rules of contract construction apply when construing a pledge agreement." Shawmut Bank Connecticut v. Connecticut Limousine Service, Inc., 40 Conn. App. 268, 275, 670 A.2d 880, cert. denied, 236 Conn. 915, 673 A.2d 1143 (1996). If a contract is clear and unambiguous, the parties' intent is a question of law and is determined by the contract language itself without reference to extrinsic evidence.Talimadge Bros., Inc. v. Iroquois Gas Transmission System, 252 Conn. 479, 495, 746 A.2d 1277 (2000). If a contract is ambiguous, however, the intent of the parties is a question of fact. Id; see also 11 S. Williston, Contracts (4th Ed. 1999) § 30:6, pp. 77-83 ("[t]he interpretation and construction of a written contract present only questions of law, within the province of the court . . . so long as the contract is unambiguous and the intent of the parties can be determined from the agreement's face").
This court finds that the plaintiff's pledge to Amresco is ambiguous as to whether it encompasses and transfers the plaintiff's interest in the promissory note. Consequently, the court finds that a genuine issue of material fact is in dispute regarding the plaintiff's right to enforce the promissory note against the defendants. Additionally, the court notes that summary judgment is "ill adapted to cases of a complex nature . . . which often need the full exploration of trial." United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 375, 260 A.2d 596 (1969). See also Miller v. United Technologies Corp., 233 Conn. 732, 752, 660 A.2d 810 (1995) (summary judgment is ill suited to the disposal of complex cases); Fiaschetti v. Nash Engineering Co., Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 115194 (May 5, 1999, Karazin, J.) ( 24 Conn.L.Rptr. 443) (same); Rafli v. Stumpf, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 155927, (February 9, 1998, Lewis, J.) (finding case complex and inappropriate for summary adjudication where parties filed voluminous memoranda and documentary evidence). Accordingly, the court hereby denies the plaintiff's motion for summary judgment.
MINTZ, J.