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BMO Harris Bank N.A. v. Unique Freight Systems, Inc.

United States District Court, W.D. Arkansas, Texarkana Division

December 11, 2018

BMO HARRIS BANK N.A. PLAINTIFF
v.
UNIQUE FREIGHT SYSTEMS, INC. and KENNETH DOUGAN DEFENDANTS

          MEMORANDUM OPINION

          Susan O. Hickey United States District Judge

         Before the Court is Plaintiff BMO Harris Bank N.A.'s (“BHB”) Motion for Summary Judgment. ECF No. 9. Defendants Unique Freight Systems, Inc. and Kenneth Dougan (collectively “Defendants”) have filed a response. ECF No. 14. BHB has filed a reply. ECF No. 26. The Court finds this matter ripe for consideration.

         I. BACKGROUND

         This is a breach of contract case. Defendant Unique Freight Systems, Inc. entered into two separate Loan and Security Agreements (the “Agreements”) with BHB to finance the purchase of eight Kenworth T660-Series semi-trucks. Defendant Kenneth Dougan personally guaranteed that Unique Freight Systems would satisfy its repayment obligations. Unique Freight Systems subsequently defaulted on the loans, and Dougan failed to remedy the default. BHB brings this action to recover the balance owed on the Agreements.

         On September 18, 2014, Unique Freight Systems entered into a Loan & Security Agreement, (“Agreement 1”) with BHB in the amount of $549, 526.32 to finance the purchase of six 2012 Kenworth T660-Series semi-trucks. Unique Freight Systems agreed to make monthly payments in the amount of $9, 812.97 beginning on November 3, 2014, for a term of 56 months. That same day, Dougan executed a “Continuing Guaranty” personally and unconditionally guaranteeing Unique Freight System's performance of all “present and future liabilities, obligations and indebtedness” to BHB.

         On February 20, 2015, Unique Freight Systems entered into a second Loan & Security Agreement (“Agreement 2”) with BHB in the total amount of $219, 526.80. This agreement was to finance the purchase of two 2013 Kenworth T660-Series semi-trucks. Under Agreement 2, Unique Freight Systems agreed to make monthly payments in the amount of $3, 658.78 beginning on April 1, 2015, for a term of 60 months.

         On October 1, 2015, Unique Fright Systems defaulted under the terms of Agreement 2 by failing to make the required minimum monthly payments. Likewise, on October 3, 2015, Unique Freight Systems also defaulted under the terms of Agreement 1 by failing to make the required payments. On February 2, 2016, Unique Freight Systems and Dougan, as the guarantor of Unique Freight Systems, were informed by letter that Unique Freight Systems was in default under the Agreements and that the accelerated balance owed to BHB would be due in ten days.

         Defendants did not pay the accelerated balance in the prescribed time. BHB alleges that the trucks were then retrieved and sold over the course of three heavy equipment auctions with the proceeds being applied towards Defendants' outstanding loan obligations. Defendants admit that the trucks were retrieved by BHB. However, Defendants contest whether the trucks were ever actually sold. Defendants further contend that if the trucks were indeed sold then the disposition sales were not commercially reasonable based on the prices BHB claimed to receive for the trucks at auction.

         After the disposition sales, a balance of $578, 835.35 remained due under the Agreements. On November 1, 2017, BHB commenced this action to recover the outstanding balance. ECF No. 1. On July 9, 2018, BHB filed its Motion for Summary Judgment and supporting documents. ECF Nos. 9-11.

         II. LEGAL STANDARD

         “Summary judgment is appropriate 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.” Hess v. Union Pac. R.R. Co., 898 F.3d 852, 856 (8th Cir. 2018) (citation omitted). Summary judgment is a “threshold inquiry of . . . whether there is a need for trial-whether, in other words, there are genuine factual issues that properly can be resolved only by a finder of fact because they reasonably may be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A fact is material only when its resolution affects the outcome of the case. Id. at 248. A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at 252.

         In deciding a motion for summary judgment, the Court must consider all the evidence and all reasonable inferences that arise from the evidence in a light most favorable to the nonmoving party. Nitsche v. CEO of Osage Valley Elec. Co-Op, 446 F.3d 841, 845 (8th Cir. 2006). The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must then demonstrate the existence of specific facts in the record that create a genuine issue for trial. Krenik v. Cnty. of LeSueur, 47 F.3d 953, 957 (8th Cir. 1995). However, a party opposing a properly supported summary judgment motion “may not rest upon mere allegations or denials . . . but must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.

         III. DISCUSSION

         BHB argues that there are no genuine disputes of material fact and that it is entitled to summary judgment. Defendants do not challenge the validity of the Agreements or the fact that they were in default.[1] However, Defendants maintain that summary judgement is improper because the ...


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