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LLC v. Williams

United States District Court, D. Maryland, Southern Division

November 2, 2017

2023 BR HOLDINGS, LLC, Plaintiff,


          Paul W. Grimm United States District Judge.

         This is a loan collection dispute where Plaintiff 2023 BR Holdings, LLC (“2023 BR”) seeks to collect payment from the guarantor, Defendant Warren Williams, after the original debtor has defaulted. Pending is 2023 BR's Motion for Summary Judgment.[1] ECF No. 17. I find that that no genuine dispute of material facts exist regarding Williams's liability, late fees, mailing costs, recording fees, advertising fees, and title search fees. But, I find genuine disputes of material facts exist as to the calculation of interest payments and the trustee's fee. Lastly, I find 2023 BR's motion for attorneys' fees to be premature. Accordingly, I will grant 2023 BR's motion in part and deny it in part and this case shall proceed to a bench trial regarding the remaining damages.


         On October 28, 2014, 2023 Benning Road, LLC (“Benning Road”) acting through Warren C. Williams, Jr., its Managing Member, entered into a loan agreement (“Note”) with City First Bank of D.C., N.A. (“City First Bank”). Note 1, ECF No. 1-1. The Note was for $1, 961, 250.00 and was to mature in one year. Id. On that same day, Williams entered into a guaranty agreement (“Guaranty”) with City First Bank, under which he would be liable for the Note if Benning Road, the borrower, failed to pay. Guaranty 1, ECF No. 1-2. The Note matured on October 28, 2015 and neither Williams nor Benning Road paid the Note in full. Pl.'s Mem. ¶ 3; Def.'s Opp'n ¶ 1. On December 9, 2016, City First Bank assigned its rights in the Note to 2023 BR in exchange for $655, 000. Assignment Docs. 1, ECF No. 1-5.

         On February 2, 2017, 2023 BR filed suit against Williams, alleging breach of his Guaranty and seeking to collect the outstanding principal and other fees and costs it believed were due under the Note. Compl., ECF No. 1. 2023 BR has moved for summary judgment and seeks the award of damages on a breach of Williams's Guaranty. Pl.'s Mot.

         Standard of Review

         Summary judgment is proper when the moving party demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1)(A); see also Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). If the party seeking summary judgment demonstrates that there is no evidence to support the nonmoving party's case, the burden shifts to the nonmoving party to identify evidence that shows that a genuine dispute exists as to material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 & n.10 (1986). The existence of only a “scintilla of evidence” is not enough to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). Instead, the evidentiary materials submitted must show facts from which the finder of fact reasonably could find for the party opposing summary judgment. Id. A “genuine” dispute of material fact is one where the conflicting evidence creates “fair doubt”; wholly speculative assertions do not create “fair doubt.” Cox v. Cty. of Prince William, 249 F.3d 295, 299 (4th Cir. 2001); see also Miskin v. Baxter Healthcare Corp., 107 F.Supp.2d 669, 671 (D. Md. 1999). The substantive law governing the case determines what is material. See Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001). A fact that is not of consequence to the case, or is not relevant in light of the governing law, is not material. Id.; see also Fed. R. Evid. 401 (defining relevance).


         “A guaranty agreement is a contract under which the guarantor promises to perform the obligations of the principal if the principal fails to perform.” CapitalSource Fin., LLC v. Delco Oil, Inc., 608 F.Supp.2d 655, 662 (D. Md. 2009) (citing Gen. Motors Acceptance Corp. v. Daniels, 492 A.2d 1306 (Md. 1985)); see also Ammerman v. Miller, 488 F.2d 1285, 1293 (D.C. Cir. 1973); Vaccaro v. Andersen, 201 A.2d 26, 28 (D.C. 1964). Thus, the Note and Guaranty are both contracts. See Ammerman, 488 F.2d at 1293; Vaccaro, 201 A.2d at 28. Under the laws of the District of Columbia, [2] “[t]o prevail on a claim of breach of contract, a party must establish (1) a valid contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.” Logan v. LaSalle Bank Nat'l Ass'n, 80 A.3d 1014, 1023 (D.C. 2013) (quoting Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187 (D.C. 2009)). When deciding whether a party breached a contract, “the plain and unambiguous meaning of an instrument is controlling, and the Court determines the intention of the parties from the language used by the parties to express their agreement.” Cunningham & Assocs., PLC v. ARAG, LLC, 842 F.Supp.2d 25, 28 (D.D.C. 2012); A-J Marine, Inc. v. Corfu Contractors, Inc., 810 F.Supp.2d 168, 185 (D.D.C. 2011)). Therefore, insofar as the terms of the Note and Guaranty are unambiguous, they are controlling. See Cunningham, 842 F.Supp.2d at 28.

         It is undisputed that Williams was a guarantor to and personally liable for the Note between Benning Road and City First Bank in the amount of $1, 961, 250.00, and neither the principal debtor nor Williams paid the loan in full when it came due on October 28, 2015. Pl.'s Mem. ¶¶ 2-3; Def.'s Opp'n ¶ 1. It also is undisputed that the outstanding principal is $1, 163, 696.07. See Pl.'s Mot. ¶ 4; Def.'s Opp'n ¶ 1. Therefore, I find based on these undisputed facts that Williams is liable as a guarantor for the Note original held by City First Bank and that the amount defaulted on is $1, 163, 696.07. See Alger Corp. v. Wesley, 355 A.2d 794, 797-98 (D.C. Cir. 1976) (finding the issuance of summary judgment as to liability on a note was proper when defendants failed to raise genuine issues as to liability) (citing Berman v. Grp. Health Ass'n, 316 A.2d 863 (D.C. 1974)).

         Williams, however, disputes whether it is 2023 BR to whom he is liable, arguing that there is a genuine dispute of material fact regarding whether 2023 BR is the real party in interest, as well as the computation of damages. Def.'s Opp'n ¶¶ 2-6. 2023 BR argues that City First Bank assigned all rights, title, and interest in the Note to it. Pl.'s Reply ¶ 1. Therefore, 2023 BR argues that its subsequent assignment of its rights was merely a collateral assignment to secure a loan, whereby it still maintains all of its rights to collect on the Note. Id.

         Collateral Assignment

         As an initial matter, I must determine if a genuine issue of material fact exists in determining if 2023 BR is the proper holder of the Note and permitted to collect the money owed on it. Williams argues that 2023 BR completed an outright assignment of its rights under the Note to WashingtonFirst Bank, adding that

it appears that plaintiff is not the holder of the Note, is not the real party in interest, and lacks standing to assert this claim. There is nothing before the Court to show that plaintiff retained the authority to seek the collection of this Note, or that Washington First Bank delegated the authority to do so.

         Def. Opp'n 1-2. Williams does not cite any law in support of this proposition or explain where his understanding of the terms of the assignment come from, asserting (in conclusory terms) merely that it “appears to be an assignment.” Id. at 1.

         The argument Williams raises is one of standing and in particular whether 2023 BR is the real party in interest as required by Rule 17(a). The Rule requires that “an action must be prosecuted in the name of the real party in interest.” Fed.R.Civ.P. 17(a). Here, if 2023 BR outright assigned its rights under the Note to WashingtonFirst Bank, it would no longer be the real party in interest, as the original holder loses all legal rights and entitlements, and the assignee becomes the real party in interest for collection purposes. See Brandenburger & Davis, Inc. v. Estate of Lewis, 771 A.2d 984, 988 (D.C. 2001) (citing D.C. Code § 28-2102; Nat'l Union Fire Ins. Co. v. Riggs Nat'l Bank, 5 F.3d 554, 556 (D.C. 1993)); Honey v. George Hyman Const. Co., 63 F.R.D. 443, 447 (D.D.C. 1974). However, a partial assignment is different:

[W]hen there has been only a partial assignment the assignor and the assignee each retain an interest in the claim and are both real parties in interest. Thus, in an action involving an assignment for collection . . . or an assignment for security, the assignor retains a sufficient interest in the property to be a real party in interest, and under Rule 17(a) either party may sue to protect those rights.

6A Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. § 1545 (3d ed. 2017) (“Wright & Miller”).

         In this case, the wording of the allonge[3] to the Note (“Allonge”) and the December 9, 2016 agreement between 2023 BR and WashingtonFirst Bank (“Security Agreement”) is unambiguous. Assignment Docs. 6; Security Agr. 1-2, ECF No. 28-1. The Allonge states that “THE NOTE is hereby endorsed and collaterally assigned to WASHINGTONFIRST BANK pursuant to a Security Agreement . . . .” Assignment Docs. 6 (emphasis added). The Security Agreement states that WashingtonFirst Bank will loan $500, 000 to 2023 BR and in doing so, 2023 BR “hereby grants to [WashingtonFirst Bank] a security interest in . . . [a]ll monies due and payable upon that certain indebtedness evidenced by that certain Deed of Trust . . . dated October 28, 2014, made by [Benning Road] . . . in the face amount of $1, 961, 250.00.” Security Agr. 1 (emphasis added). The language of the documents, which specifically refers to the transaction as “collaterally assigned” and “a security interest, ” makes it clear that the Security Agreement is not an outright assignment of all ...

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