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National Bank of Tennessee v. Scott Wade Applegate

October 31, 2006

NATIONAL BANK OF TENNESSEE, PLAINTIFF/COUNTER DEFENDANT,
v.
FREDERICK L. MCDONALD, II, DEFENDANT/COUNTER PLAINTIFF/THIRD PARTY PLAINTIFF/COUNTER DEFENDANT,
v.
SCOTT WADE APPLEGATE, THIRD PARTY DEFENDANT/ COUNTER PLAINTIFF.



The opinion of the court was delivered by: Leon Jordan United States District Judge

MEMORANDUM OPINION

Now before the court is the motion for summary judgment filed by plaintiff National Bank of Tennessee ("NBT") [doc. 65], pertaining both to NBT's complaint against defendant Frederick L. McDonald, II and to McDonald's counterclaim against NBT. Also before the court is NBT's motion to dismiss [doc. 60] the third-party claim of Scott Wade Applegate. For the reasons that follow, each motion will be granted.

I.

Procedural Background The facts underlying this litigation have been previously set forth by the court and need not be repeated at length herein. See Nat'l Bank of Tenn. v. McDonald, No. 2:03- CV-401, 2006 WL 2711682 (E.D. Tenn. Sept. 21, 2006). Briefly, McDonald guaranteed a $750,000.00 promissory note executed by Southeast Machining, LLC. NBT is the holder of the note. Because the note is now in default, NBT seeks judgment against guarantor McDonald for the unpaid balance.

Early in the procedural history of this case, McDonald filed a counterclaim [doc. 19] alleging negligence and fraud. He also filed a third-party complaint [doc. 25] alleging joint and several liability against three parties, each of whom were subsequently dismissed voluntarily. [Docs. 30, 36].

Next, following the February 13, 2006 denial of Applegate's bankruptcy discharge, McDonald filed a May 31, 2006 third-party complaint against Applegate [doc. 50], again alleging joint and several liability. Applegate subsequently answered the third-party complaint, adding both a counterclaim against McDonald (indemnity/contribution) and a third-party claim against NBT (bad faith). [Doc. 58].

NBT and Applegate are also presently litigating in state court. On April 6, 2006, NBT filed a complaint in Knox County Chancery Court seeking judgment against Applegate, as guarantor, for the unpaid note balance. On August 4, 2006, Applegate filed with the state court a motion to dismiss, arguing that the state court litigation is duplicative and is unnecessary due to the nature of proceedings pending in the Federal Court in Greeneville and said issues may be addressed adequately and completely there by plaintiff and eliminate a need for the instant proceeding. The defendant herein seeks to avoid defending duplicate suits and the risk of inconsistent decisions.

Similarly, in his third-party claim before this court, Applegate asks the Court to hear the underlying issues related to the bank's indebtedness and any asserted liability against guarantors Applegate and McDonald. . . . . On the basis of judicial economy, on the basis of avoiding inconsistent decisions on similar claims, and on the basis of this Court's ancillary and/or pendent jurisdiction, Applegate asks that this Court hear all issues between these parties [NBT, McDonald, and Applegate] related to the subject indebtedness of Southeast Machining, LLC and/or the aforementioned guarantors.

[Doc. 58].

The citizenship of the parties is not in dispute. McDonald is a citizen of Michigan. NBT and Applegate are citizens of Tennessee.

II.

Summary Judgment Standard Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Edwards v. Aguillard, 482 U.S. 578, 594 (1987) (quoting Fed. R. Civ. P. 56(c)). "Other exhibits may be admitted into evidence and considered if the exhibits are properly authenticated and attached to an affidavit." Guzman v. Denny's, Inc., 40 F. Supp. 2d 930, 935 n.3 (S.D. Ohio 1999). The movant may discharge its burden by demonstrating that the non-moving party has failed to establish an essential element of that party's case for which it bears the ultimate burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

After the moving party has carried its initial burden of showing that there are no genuine issues of material fact in dispute, the burden shifts to the non-moving party to present specific facts demonstrating a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). In order to defeat a motion for summary judgment, the non-moving party must present significantly probative evidence in support of its complaint. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). The non-movant's evidence is to be believed, and all justifiable inferences are to be drawn in that party's favor. Liberty Lobby, 477 U.S. at 255. The court determines whether the evidence requires submission to a jury or whether one party must prevail as a matter of law because the issue is so one-sided. Id. at 251-52. "Where the defendant demonstrates that after a reasonable period of discovery the plaintiff ...


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