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Bank of West v. CL Tech, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

November 1, 2017

BANK OF THE WEST, Plaintiff,
v.
CL TECH, INC., and FRED C. STADLER, Defendants.

          ORDER

          Hon. Jane Magnus-Stinson, Chief Judge

         Bank of the West (“BOW”) is the holder of four personal guarantees (“Guarantees”) executed by Fred C. Stadler, each of which each guarantee payment under four commercial equipment leases (the “Leases”) executed by CL Tech, Inc. (“CL Tech”). CL Tech failed to make timely payments on the Leases and therefore defaulted. Mr. Stadler also failed to timely pay the amounts due under the Leases and is under default pursuant to the Guarantees. Following Mr. Stadler's and CL Tech's defaults, BOW repossessed three of the four pieces of commercial equipment subject to the Leases and contracted with an outside vendor to sell the equipment at auction. BOW filed this action to recover the remaining deficiency from Mr. Stadler under the Leases and Guarantees.

         Presently pending before the Court is BOW's Motion for Summary Judgment against Mr. Stadler for breaching the Guarantees.[1] [Filing No. 45.] Defendants did not respond to the facts asserted by BOW.

         I.

         Background

         A. Lease 1

         On June 26, 2014, CL Tech entered into Commercial Lease Agreement No. 0113734-001 (“Lease 1”) with Trinity, a division of BOW, for the lease of a New Fanuc R-2000iB/165R 6-Axis Robotic Machining System (“Lease 1 Equipment”). [Filing No. 45-1 at 3.] BOW purchased the Lease 1 Equipment for $248, 680.00. [Filing No. 45-1 at 3.] Lease 1 Equipment, which was a programmable robot that was part of a much larger cell, included “soft costs” incurred in programming the robot for use specifically with that cell, which hold no value in a secondary market. [Filing No. 45-1 at 3.]

         Lease 1 commenced on November 1, 2014, and lasted for 63 months. [Filing No. 1-3 at 1.] CL Tech agreed to pay a rental fee of $4, 720.08 per month. [Filing No. 1-3 at 1.] Lease 1 stated that if the rental fee “is not paid within 5 days after its due date, [CL Tech] agree[s] to promptly pay a late charge of 10% of the past due amount … plus interest on any amounts over 30 days past due at the rate of 1.5% per payment period.” [Filing No. 1-3 at 2.]

         Lease 1 also provided that failure to timely pay the rental fee would result in a default. [Filing No. 1-3 at 3.] In the event of default, Lease 1 stated that:

Upon such default, we may, at our option, do one or more of the following: a) require you to immediately pay the remaining amounts due under this Agreement including but not limited to the balance of unpaid Rentals discounted to its present value at a rate of 3% per year; b) terminate this Agreement and/or any other agreements we have entered into with you; c) require you to immediately pay us the value of the Equipment or promptly return the Equipment to us in good condition; … and f) use any other remedies available to us at law or equity.…You agree to pay all of our costs to enforce this Agreement including reasonable attorney's fees and the costs of repossessing, refurbishing, sorting and selling the Equipment. If we take possession of the Equipment, we may sell or otherwise dispose of it at a public or private sale, and apply the proceeds (after deducting our disposition costs) to the amounts that are still due to us. Our acceptance of any amount due hereunder which is less than payment in full of all amounts due and owing at that time shall not constitute a waiver of our right to receive payment in full.

[Filing No. 1-3 at 2.]

         On the same date that CL Tech signed Lease 1, Mr. Stadler executed a Personal Guaranty (“Lease 1 Guaranty”), in which he personally guaranteed CL Tech's performance of all obligations set forth in Lease 1. [Filing No. 1-4.] In the Lease 1 Guaranty, Mr. Stadler promised to pay all expenses, including reasonable attorneys' fees, incurred to enforce the Guaranty. [Filing No. 1-4.]

         B. Lease 2

         On April 1, 2015, CL Tech entered into Lease Agreement No. 0003521-011) (“Lease 2”) with Manufacturer Capital, LLC for the lease of a new Roto-Flo 4-1084#DOJ95L Production Racks w/ Spacers S/N, one new Roto-Flo 3-383#BJ107L Production Racks w/ Spacers S/N, and one new WCEC Robotic Material Handling Cell Training S/N (“Lease 2 Equipment”). [Filing No. 1-5 at 1.] The “Initial Term of Lease” began on April 1, 2015, for a period of 60 months. [Filing No. 1-5 at 1.] CL Tech agreed to pay a monthly rental fee of $528.31. [Filing No. 1-5 at 1.] Lease 2 stated that any “fail[ure] to pay any Lease Payment or any other payment within 10 days of its due date” constitutes a default. [Filing No. 1-5 at 3.]

         Lease 2 provided the following remedies in the event of a default:

If a Default occurs, Lessor may do one or more of the following: (i) Lessor may cancel or terminate this Lease or any other agreement that Lessor has entered into with Lessee; (ii) Lessor may require Lessee to immediately pay Lessor, as compensation for loss of Lessor's bargain and not as a penalty, a sum equal to the Casualty Value as set forth in paragraph 10; (iii) Lessor may require Lessee to deliver the Equipment to Lessor as set forth in paragraph 7; (iv) Lessee agrees to pay all of Lessor's or its agents or assigns costs of enforcing Lessor's right against Lessee including reasonable attorney's fees; … and (vi) charge interest on all past due amounts at 1% per month; and (vii) Lessor or it's [sic] agent may peacefully exercise any other right or remedy available at law or in equity. If Lessor takes possession of the Equipment Lessor may sell or otherwise dispose of it with or without notice, at a public or private sale, and apply the net proceeds (after deducting costs related to the sale or disposition of the Equipment) to the amounts that Lessee owes Lessor. . . . Lessee will remain responsible for any amounts that are due after Lessor has applied such net proceeds. . . . Each remedy shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or equity. No express or implied waiver of any default shall constitute a waiver of any of Lessor's other rights.

[Filing No. 1-5 at 3.]

         In connection with Lease 2, Mr. Stadler executed a Personal Guaranty dated April 1, 2015 (“Lease 2 Guaranty”), wherein he guaranteed CL Tech's performance of ...


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