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CBR Funding, LLC v. Jones

United States District Court, W.D. Tennessee, Eastern Division

April 2, 2015

CBR FUNDING, LLC, Plaintiff,
CHARLES A. JONES and SARAH C. JONES, Defendants/Third-Party Plaintiffs, DAVID B. GRIFFIN, Third-Party Defendant.


J. DANIEL BREEN, Chief District Judge.

Before the Court are the supplemental briefs addressing damages and Third-Party Defendant's, David Griffin ("Griffin"), liability as a co-guarantor to the Defendants/Third-Party Plaintiffs, Charles A. and Sarah C. Jones ("the Joneses"). (Docket Entries ("D.E.") 56, 59, 63-1.)

Background [1]

This lawsuit stems from College Book Rental Company's ("CBR") default on two loans that were personally guaranteed by the Joneses, Griffin, and his wife, Roxie Griffin.[2] The Court issued an order on the parties' cross-motions for summary judgment, finding that the Plaintiff, CBR Funding, LLC ("CBR Funding")[3], had validly purchased the loans from Security Bank & Trust Company ("Security Bank"), and that the Joneses, as guarantors, were personally liable after CBR defaulted. (D.E. 49 at 21.) The Court denied Plaintiff's motion for summary judgment on the issue of damages, and requested supplemental briefing focusing on that issue and on the Joneses' third-party contribution claim against Griffin. (Id. at 21-22.)

In addition to filing a supplemental brief, the Joneses moved to amend their third-party complaint to bring an indemnification claim against Griffin, and to implead Roxie Griffin. (D.E. 61.) The Court denied this motion, finding that the Joneses failed to demonstrate good cause under Fed.R.Civ.P. 16(b) for amending their third-party complaint after the deadline had passed. (D.E. 66.)

Legal Standard

Rule 56 provides in pertinent part that "[t]he court shall grant summary judgment 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." Fed.R.Civ.P. 56(a). The court is to "view facts in the record and reasonable inferences that can be drawn from those facts in the light most favorable to the nonmoving party." Canady v. Gillette Co., 547 F.Appx. 670, 677 (6th Cir. 2013) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). It is not to "weigh evidence, assess credibility of witnesses, or determine the truth of any matter in dispute." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). The court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Kroll v. White Lake Ambulance Auth., 763 F.3d 619, 623 (6th Cir. 2014) (quoting Anderson, 477 U.S. at 251-52).

The moving party "has the initial burden of showing the absence of a genuine dispute as to a material fact." Automated Solutions Corp. v. Paragon Data Sys., Inc., 756 F.3d 504, 520 (6th Cir. 2014) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the motion is properly supported, "the opposing party must go beyond the contents of its pleadings to set forth specific facts that indicate the existence of an issue to be litigated." Slusher v. Carson, 540 F.3d 449, 453 (6th Cir. 2008) (citations omitted). The nonmoving party must point to evidence in the record upon which a reasonable finder of fact could find in its favor. Anderson, 477 U.S. at 248-49. The genuine issue must also be material; that is, it must involve facts that might affect the outcome of the suit under the governing law. Id. A court must grant summary judgment "after adequate time for discovery and upon motion, against a party who 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." Celotex, 477 U.S. at 322.


A. Request for a Hearing

The Joneses request a hearing so the Court may consider their indemnification claim against Griffin, the commercial reasonableness of the asset sale, and the inconsistency in the damages being sought by Plaintiff. (D.E. 59 at 2, 5-7.) The Court previously considered-and denied-the Joneses' motion to amend the third-party complaint to bring an indemnification claim against Griffin. (D.E. 66 at 3-6.) A hearing for that purpose is therefore unnecessary.

The Joneses also request a hearing to challenge the commercial reasonableness of the June 11, 2013 asset sale, insisting that the amount CBR received for these items was substantially lower than their actual value. (D.E. 59 at 6-7.) The United States Bankruptcy Court for the Middle District of Tennessee ("Bankruptcy Court"), issued an order approving the5> sale of certain assets owned by CBR to CBR Funding, finding that "[t]he transactions contemplated by the Purchase Agreement are undertaken by [CBR Funding] in good faith, as that term is used in Section 363(m) of the Bankruptcy Code[.]" (D.E. 58-1 at 13.) The bankruptcy court noted that the trustee had provided adequate and timely notice of the auction sale to all parties-in-interest. (Id. at 2-3.) The bankruptcy court held that "[CBR Funding] is a good faith purchaser under Section 363(m) of the Bankruptcy Code, and, as such, is entitled to all of the protections afforded under said section of the Bankruptcy Code." (Id. at 3.) The bankruptcy court described CBR Funding's credit bid as fair and reasonable, the highest and best offer received, and one that constituted "reasonably equivalent value and fair consideration under the Bankruptcy Code and under the laws of the State of Tennessee." (Id. at 4.)

While Defendants seek to challenge the commercial reasonableness of the asset sale, "[u]nder 11 U.S.C. ยง 363(m), an approved sale of chapter 11 bankruptcy estate property generally cannot be challenged on appeal if the sale has already been consummated in good faith without an intervening stay." In re Nashville Sr. Living, LLC, 620 F.3d 584, 586 (6th Cir. 2010); In re Parker, 499 F.3d 616, 620-21 (6th Cir. 2007) (same). There is no evidence that the Joneses sought a stay of the asset sale in the bankruptcy proceeding. They cannot now attempt to challenge its commercial reasonableness in this Court. Defendants' request for a hearing on this issue is DENIED.

Finally, the Joneses request a hearing on the issue of damages, alleging that there is no evidence in the record that supports the amount being sought, and that Plaintiff's damage computations are internally inconsistent. (D.E. 59 at 5-7.) Plaintiff has provided several documents showing the balance due on the two loans on various dates. One is Security Bank's August 16, 2012 demand letter to CBR and the guarantors notifying them that the two loans were5> in default. (D.E. 57-1.) The demand letter stated that the total amount due on the loans was $5, 563, 253.90 and $2, 261, 403.90. (Id. at 2.) These amounts included interest and Security Bank's attorney's fees through August 16, 2012. (Id. ...

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