Summary
The United States District Court for the District of Arizona grants Plaintiffs’ motion for summary judgment in an action against Joseph Shapiro for breach of a personal guaranty securing loans to Oncam Inc. The court precludes Shapiro from relying on untimely or undisclosed evidence under the Mandatory Initial Discovery Pilot and Federal Rule of Civil Procedure 37(b)(2). It then addresses his defenses concerning deficiency calculations and the commercial reasonableness of a UCC sale of collateral.
Topics
Practice areas
Questions Presented
- Whether summary judgment is appropriate for Plaintiffs' breach of guaranty claim
- Whether Defendant's express waiver of defenses bars his AUCC-based defenses
- Whether Defendant demonstrated a genuine dispute of material fact regarding the deficiency calculation following the UCC sale
- Whether Defendant demonstrated a genuine dispute of material fact regarding the commercial reasonableness of the UCC sale
Holdings
- Under the Mandatory Initial Discovery Pilot (MIDP) and Rule 37(b)(2), Defendant is precluded from using evidence not disclosed in compliance with the court's scheduling order, due to willful and repeated non-compliance.
- Defendant's express waiver of defenses does not render him entirely defenseless; the AUCC generally prohibits waiver of rules governing disposition of collateral, deficiency calculation, and commercial reasonableness, but Defendant effectively waived his right to reasonable notice of the UCC sale by agreement entered after default.
- Defendant failed to demonstrate a genuine issue of material fact regarding whether the UCC sale proceeds were 'significantly below the range of proceeds' for a complying disposition, as he provided no evidence of what the proper range would be.
- Defendant failed to place Plaintiffs' AUCC compliance at issue by failing to present specific facts demonstrating a genuine dispute regarding the commercial reasonableness of the UCC sale's manner, the exclusion of the Box, or the notice provided.
- There are no genuine disputes of material fact as to the existence of the guaranty, Defendant's breach, or the amount of damages. Plaintiffs have proven all elements of their breach of guaranty claim under Arizona law and are entitled to judgment as a matter of law.
Key quotations
“Preclusionary orders ensure that a party will not be able to profit from its own failure to comply.” (at 7)
“District courts' discretion under Rule 37(b)(2) is broadest when a party's non-compliance is due to 'willfulness, bad faith, or any fault' of that party.” (at 8)
“A 'scheduling conference order is not a frivolous piece of paper, idly entered, which can be cavalierly disregarded without peril.'” (at 1)
“A summary judgment motion cannot be defeated by relying solely on conclusory allegations unsupported by factual data.” (at 25)
Factual background
Plaintiffs, investors and their company, extended secured loans to a video technology corporation (Oncam) where Defendant was Chairman and CEO. After Oncam defaulted, the parties entered settlement agreements and a guaranty where Defendant assumed personal liability. Defendant and Oncam failed to pay under the agreements. Plaintiffs conducted a UCC sale of Oncam's assets, acquiring them for $145,000. Defendant failed to pay the remaining amounts owed under the guaranty.
Procedural history
Plaintiffs sued for breach of guaranty. After discovery disputes and a bankruptcy stay, Plaintiffs moved for summary judgment. The court granted the motion.