United States District Court, S.D. Indiana, Evansville Division
ENTRY ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
RICHARD L. YOUNG, Chief District Judge.
Plaintiff, Midwest Investment Partners LLC ("Midwest"), is the holder of two convertible promissory notes issued by Defendant, Standard Gold Holdings, Inc. ("Standard Gold"). Midwest brought suit against Standard Gold alleging breach of contract due to default on each note. Pursuant to a fee-shifting provision contained within each note, Midwest also seeks to recover attorneys' fees and expenses from Standard Gold in relation to Midwest's attempts to collect payment on the notes. Standard Gold argues that the fee-shifting provisions are unenforceable, or at the very least, there is a factual dispute regarding their enforceability. Midwest moves for summary judgment regarding Standard Gold's liability for payment of principal and interest on the two promissory notes and payment of Midwest's attorneys' fees and expenses. For the reasons stated below, Midwest's motion is GRANTED.
Midwest and Standard Gold are parties to two convertible promissory notes, No. MIP-1.1 ("Note 1.1") and No. MIP-2 ("Note 2"). (Complaint ¶¶ 7-9, Filing No. 1; Deposition of Frederick Shultz ("Shultz Dep.") ¶¶ 3, 8, Filing No. 22-2). Midwest is the holder of both notes which were issued by Standard Gold. (Shultz Dep. ¶¶ 3, 8, Filing No. 22-2).
Note 1.1, dated April 5, 2011, is for the principal amount of $50, 000 and provides that interest will accrue at an annual rate of six percent. (Complaint ¶ 8, Filing No. 1; Complaint Exhibit 2, Filing No. 1-2). The maturity date of Note 1.1 was October 6, 2011. (Complaint ¶ 8, Filing No. 1; Complaint Exhibit 2, Filing No. 1-2). Note 2, dated September 2, 2011, is for the principal amount of $25, 000 and provides that interest will accrue at an annual rate of six percent. (Complaint ¶ 9, Filing No. 1; Complaint Exhibit 3, Filing No. 1-3). The maturity date of Note 2 was February 29, 2012. (Complaint ¶ 9, Filing No. 1; Complaint Exhibit 3, Filing No. 1-3).
Both notes contain the following fee shifting provision: "Holder may employ an attorney to enforce its rights and remedies hereunder and Company [Standard Gold] hereby agrees to pay Holder's reasonable attorneys' fees and other reasonable expenses incurred by Holder in exercising any of Holder's rights and remedies upon default...." (Complaint Exhibit 2, § 4.2(b), Filing No. 1-2; Complaint Exhibit 3, § 4.2(b), Filing No. 1-3). Further, both notes define default in part as "[t]he Company's [Standard Gold] failure to remit to Holder the Principal or interest hereof as the same becomes due hereunder...." (Complaint Exhibit 2, § 4.1(a), Filing No. 1-2; Complaint Exhibit 3, § 4.1(a), Filing No. 1-3).
Midwest made written demands for payment from Standard Gold on both notes after their respective maturity dates. (Complaint ¶ 11, Filing No. 1; Shultz Dep. ¶¶ 5, 10, Filing No. 22-2). Midwest has not received any payment from Standard Gold on either Note 1.1 or Note 2. (Complaint ¶ 12, Filing No. 1; Shultz Dep. ¶¶ 6, 11, Filing No. 22-2). Midwest has now hired attorneys to enforce its rights and remedies under both notes. (Shultz Dep. ¶ 13, Filing No. 22-2).
II. Summary Judgment Standard
The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Advisory Committee Note to 1963 Amendment of FED. R. CIV. P. 56(e)). Summary judgment is proper where "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). A genuine dispute of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the particular issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
On a motion for summary judgment, the moving party must show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). After the moving party shows that there is an absence of a genuine issue for trial, the burden shifts to the non-movant to "go beyond the pleadings" and to point to evidence of a genuine factual dispute precluding summary judgment. Id. at 322-23. "If the non-movant does not come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question, then the court must enter summary judgment against [it]." Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994) (emphasis in original) (citing Matsushita, 475 U.S. at 585-87; Celotex, 477 U.S. at 322-24; Anderson, 477 U.S. at 249-52).
Midwest has moved for summary judgment on all four counts contained in its complaint. In Count I, Midwest alleges breach of contract on Note 1.1 by Standard Gold as a result of Standard Gold's lack of payment of the principal and interest due on the note. In Count II, Midwest seeks to recover attorneys' fees and other reasonable expenses it paid to enforce its rights and remedies under Note 1.1. In Count III, Midwest alleges breach of contract on Note 2 by Standard Gold as a result of Standard Gold's lack of payment of the principal and interest due on the note. In Count IV, Midwest seeks to recover attorneys' fees and other reasonable expenses it paid to enforce its rights and remedies under Note 2. Given the similarities in the counts, Counts I and III will be combined in the analysis below, as will Counts II and IV.
A. Default on Note 1.1 and Note 2 (Counts I and III)
Midwest is entitled to summary judgment on Counts I and III regarding Standard Gold's default on Note 1.1 and Note 2. Rather than pointing to a dispute regarding a material fact, Standard Gold admitted to all material allegations brought forth in Midwest's complaint concerning default on the notes. (Answer ¶¶ 13-17, 24-28, Filing No. 13). Further, Standard Gold admitted its liability to Midwest for the principal and interest amounts due under both notes. ( Id. at ¶¶ 18, 29). Thus, Standard Gold has failed to raise a genuine issue of ...