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Ringdahl v. Afsharjavan

United States District Court, D. Maryland

October 22, 2019




         Pending in this breach of contract action is Plaintiff Robert Ringdahl's motion for summary judgment (ECF No. 47). The motion is fully briefed, and no hearing is necessary. See Loc. R. 105.6. For the following reasons, the Court grants Ringdahl's motion as to liability, but denies the motion as to damages. Ringdahl will be granted 14 days from the date of this Opinion and accompanying Order to supplement the record as to damages and to submit a petition for reasonable attorneys' fees.

         I. Background

         The following facts are undisputed. In June 2017, Ringdahl loaned $150, 000 to Binary Group, Inc. (“Binary Group”), a government contractor. ECF No. 50 ¶ 13; ECF No. 2 at 7; ECF No. 12 at 7; ECF No. 47-3 ¶ 3. Defendant Artin Afsharjavan, a shareholder of Binary Group and a member of its board of directors, personally guaranteed the loan as memorialized in a written Guaranty Agreement. ECF No. 47-13; ECF No. 50 ¶ 5; ECF No. 47-10 at 4-7. Additionally, Binary Group's CEO, Kawaljit Singh, memorialized an identical Guaranty Agreement in connection with the Ringdahl loan. ECF No. 47-10 at 13-16. Both Guaranty Agreements provided that if Binary Group defaulted on repayment terms of the Ringdahl loan, Ringdahl could seek satisfaction of the loan from Afsharjavan and Singh regardless of whether Ringdahl pursued separate legal action against Binary Group. ECF No. 47-10 at 4-7, 13-16.

         In addition to the Guaranty Agreements, Afsharjavan and Singh executed two separate Stock Pledges, identical except for the number of shares pledged. Afsharjavan secured the loan by pledging 450, 000 shares of Binary Group stock to Ringdahl, whereas Singh pledged 40, 500 shares. ECF No. 47-10 at 8-12, 17-22. Both Stock Pledges provided that the stock would be released once the loan was paid in full. Id.

         During this time, Binary Group experienced financial difficulties and failed to pay on the Ringdahl loan. On November 20, 2017, Binary Group and Ringdahl modified the terms of the loan by way of an allonge to the promissory note, which extended payments on the loan through February 1, 2018 but did not otherwise change the terms of the Guaranty Agreements or Stock Pledges. ECF No. 47-15. Binary Group, however, did not satisfy the amended loan agreement, and on January 2, 2018, Ringdahl issued a notice of loan default on the company. ECF No. 47-18. The outstanding loan balance owed to Ringdahl at that time was $128, 750. ECF No. 47-18; ECF No. 47-3 ¶¶ 23-25.

         On January 11, 2018, the Binary Group Board scheduled an emergency Board meeting to take place on January 22, 2018. ECF No. 50-13. The purpose of the meeting was to address the financial health of the company and whether Singh should be ousted from the Board for having taken money from the company. See ECF Nos. 50-13; 47-17. On the same day, Singh and Ringdahl entered a separate agreement which released Singh from his personal guaranty on the loan in exchange for transferring his 450, 000 shares of Binary Group stock to Ringdahl. ECF No. 50-12. Singh also agreed to allow Ringdahl a proxy vote for the 450, 000 shares at upcoming Board meetings until the shares were transferred. Id.

         The Board meeting occurred as planned. On January 22, 2018, Singh was unanimously voted off the Board and Ringdahl was voted in as a Director, albeit over Afsharjavan's objection. ECF No. 50-13. The record is unclear as to whether Singh ever transferred the 450, 000 shares to Ringdahl, and if so, the fair market value of such shares at the time of transfer.[1] Further, although Ringdahl acknowledged in his deposition to having “settled” the matter with Singh, the record sheds no additional light on the terms of this settlement and whether the settlement satisfied some or all of the outstanding balance of the Ringdahl loan. ECF No. 50-5 at 3.

         Initially, Ringdahl filed suit in the Circuit Court for Montgomery County, Maryland alleging that Afsharjavan breached his obligations under the Guaranty Agreement and the Stock Pledge by failing to pay the outstanding loan amounts. ECF No. 2. Afsharjavan, proceeding pro se, removed the action to this Court. ECF No. 1. After a lengthy discovery period, Ringdahl moved for summary judgment on both counts. ECF No. 47.

         II. Standard of Review

         Summary judgment is appropriate when the court, viewing the evidence in the light most favorable to the non-moving party, finds no genuine disputed issue of material fact, entitling the movant to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008). “A party opposing a properly supported motion for summary judgment ‘may not rest upon the mere allegations or denials of [his] pleadings,' but rather must ‘set forth specific facts showing that there is a genuine issue for trial.'” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003) (quoting former Fed.R.Civ.P. 56(e)). “A mere scintilla of proof . . . will not suffice to prevent summary judgment.” Peters v. Jenney, 327 F.3d 307, 314 (4th Cir. 2003). Importantly, “a court should not grant summary judgment ‘unless the entire record shows a right to judgment with such clarity as to leave no room for controversy and establishes affirmatively that the adverse party cannot prevail under any circumstances.'” Campbell v. Hewitt, Coleman & Assocs., Inc., 21 F.3d 52, 55 (4th Cir. 1994) (quoting Phoenix Sav. & Loan, Inc. v. Aetna Casualty & Sur. Co., 381 F.2d 245, 249 (4th Cir. 1967)). Where the party bearing the burden of proving a claim or defense “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, ” summary judgment against that party is likewise warranted. Celotex, 477 U.S. at 322. Although a pro se party is “given some latitude, ” he may not avoid summary judgment by “relying on bald assertions and speculative arguments.” Mansfield v. Kerry, No. DKC 15-3693, 2016 WL 7383873, at *2 (D. Md. Dec. 21, 2016) (citing Smith v. Vilsack, 832 F.Supp.2d 573, 580 (D. Md. 2011)).

         III. Discussion

         As a preliminary matter, the Court must determine which state law applies to the claims. Federal courts sitting in diversity apply the conflict of laws rules of the forum state. See Sokolowski v. Flanzer, 769 F.2d 975, 977 (4th Cir. 1985). Under Maryland law, if the contract does not include a choice-of-law provision, the court applies “the law of the jurisdiction where the contract was made.” Cunningham v. Feinberg, 441 Md. 310, 326 (2015). The Guaranty Agreement plainly states that Maryland law applies. ECF No. 47-10 at 7. Although the Stock Pledge does not include an express choice-of-law provision, the record reflects that it was executed contemporaneously with the promissory note between Ringdahl and Binary Group, which clearly demonstrates that the Stock Pledge was made in Maryland. ECF No. 2 ¶ 19; ECF No. 47-10 at 2-3 (stating that the note “is secured . . . by a stock pledge agreement dated the date hereof” and that the note “is made in . . . the State of Maryland”). Moreover, neither party disputes that Maryland law applies to both agreements. The Court, therefore, applies Maryland law to the claims.

         In Maryland, “to state a claim for breach of contract, a plaintiff need only allege the existence of a contractual obligation owed by the defendant to the plaintiff, and a material breach of that obligation by the defendant.” RRC Ne., LLC v. BAA Maryland, Inc., 413 Md. 638, 658 (2010). For each of the contracts in dispute, Afsharjavan has failed to generate a genuine issue of ...

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