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SWL, L.L.C. v. Nextgear Capital, Inc.

Court of Appeals of Indiana

August 28, 2019

SWL, L.L.C. and Scott Lollar, Appellants-Defendants/Counterclaim Plaintiffs,
v.
NextGear Capital, Inc., Appellee-Plaintiff/Counterclaim Defendant.

          Appeal from the Hamilton Superior Court The Honorable Steven R. Nation, Judge The Honorable Darren J. Murphy, Magistrate Trial Court Cause No. 29D01-1608-CC-6680.

          Attorney for Appellants Jonathan D. Harwell Harwell Legal Counsel LLC Indianapolis, Indiana

          Attorneys for Appellee David J. Jurkiewicz Nathan T. Danielson Christina M. Bruno Bose McKinney & Evans LLP Indianapolis, Indiana

          Najam, Judge.

         Statement of the Case

         [¶1] SWL, LLC ("SWL") and Scott Lollar (collectively, "Dealer") appeal the trial court's grant of summary judgment for NextGear Capital, Inc. ("NextGear") on NextGear's complaint, which alleged that SWL had breached a contract with NextGear and that Lollar had breached a guaranty, and on Dealer's counterclaims against NextGear, which included claims for defamation and tortious interference with a business relationship. Dealer presents one issue for our review, namely, whether the trial court erred when it entered summary judgment for NextGear on its complaint and on Dealer's counterclaims.

         [¶2] We affirm in part, reverse in part, and remand for further proceedings.

         Facts and Procedural History

         [¶3] On August 13, 2013, NextGear entered into a demand promissory note and loan and security agreement ("the Contract") with SWL in which NextGear agreed to extend to SWL a revolving line of credit or floor plan of up to $400, 000, which SWL would use to purchase vehicles from auctions.[1] SWL and NextGear also entered into an advance schedule, which outlined the payment schedule and amounts that SWL was required to pay to NextGear for each vehicle that SWL had purchased using funds from NextGear. On that same day, Lollar, who operated SWL, executed an individual guaranty in which he agreed to "voluntarily, unconditionally, and absolutely" guarantee the liabilities of SWL under the Contract. Appellant's App. Vol. II at 39. After the parties executed the loan documents, NextGear advanced funds to SWL for the purchase of vehicles.

         [¶4] Sometime thereafter, Lollar contacted Karen Lee, an account executive with NextGear, by phone in order to inform NextGear that SWL wanted to liquidate its inventory and pay off its balances.[2] In response, Lee proposed a plan that would continue SWL's business relationship with NextGear. On February 24, 2016, Lee forwarded to Lollar a copy of an email that contained the terms of the proposed plan. In that email ("the February email"), which Lee had previously sent to other employees of NextGear, Lee wrote:

Dealer has been selling units, he's been paying off consistently through retail sales and auction sales[. H]e's gone from outstanding of $203k down to 97k balance.
. . . We are going to pay off [stock] #510 tomorrow . . . for full [purchase price], putting the funds in unapplied funds. By Friday am, dealer will have enough cash to go with the unapplied funds to pay off [stock] #513.[[3] I am going to refloor #513 for full [purchase price]. This will reset the counter for the dealer to have the engine in #513 done, he has a [credit card] with available balance on it to pay for engine, he has a buyer on the unit and unit should be repaired and gone off floor plan before the next 30 days. . . .
Given with the speed the dealer is moving the units and with dealer staying on track, as well as the lengthy impeccable history with this dealer, . . . we need to move this direction & continue working with dealer to get back current. Of course, if any of this falls through we will have to reconvene with dealer and go a different direction.

Id. at 140. Lee later informed Lollar that "the plan had been approved by the 'front end risk manager'" for NextGear." Id. at 136.

         [¶5] The day after Lollar had received the email from Lee, Dealer paid NextGear $7, 562.86 to pay off stock number 510. Dealer then paid off stock number 513.[4]Lee continued to assure Lollar "that [Dealer's] previous payments pursuant to her plan would be placed in [its] unapplied funds account" for Dealer to use to make the next curtailment payments. Id. at 137. However, NextGear did not place any funds in Dealer's unapplied funds account. As a result, Dealer was unable to make the next scheduled payments for the remaining vehicles. NextGear then repossessed the remaining cars in Dealer's inventory that NextGear had financed. Thereafter, NextGear informed Dealer's other lenders that Dealer had defaulted on the loan documents, and Dealer's other lenders then repossessed Dealer's remaining vehicles.

         [¶6] On August 4, NextGear filed a complaint against Dealer. In its complaint, NextGear alleged that Dealer had not repaid the funds that NextGear had advanced to Dealer in accordance with the loan documents. Accordingly, NextGear asserted that SWL had breached the Contract and that Lollar had breached the guaranty. In response, Dealer filed its answer and affirmative defenses. Specifically, Dealer asserted that it did not breach the Contract because the February email had "modified the terms" of the Contract, that Dealer had "performed all obligations required of [it] pursuant to the terms" of the modified contract when it submitted the payments for the two units, and that NextGear had "breached the terms of the parties['] modified agreement" when it failed to place those payments in Dealer's unapplied funds. Id. at 51. In addition, Dealer filed two counterclaims against NextGear. Dealer asserted that NextGear had committed defamation and tortious interference with a business relationship when it wrongfully informed other lenders that Dealer had defaulted on the loan documents.

         [¶7] On February 16, 2018, NextGear filed a motion for summary judgment. In that motion, NextGear asserted that SWL had breached the terms of the Contract when it failed to make payments due under the Contract and that Lollar had breached the guaranty when it failed to pay SWL's debt. NextGear also asserted that it had not modified the Contract. As for Dealer's counterclaims, NextGear asserted that the Contract authorized NextGear to share information regarding Dealer's financial status with other lenders and that its statements to the other lenders were true. In support of its motion for summary judgment, NextGear designated the Contract and the affidavit of Greg Hidbrader, NextGear's Supervisor of Risk and Recovery, in which Hidbrader stated that NextGear's advances to Dealer "have not been fully repaid as agreed." Id. at 113.

         [¶8] In response, Dealer asserted that there were genuine issues of material fact with respect to NextGear's affirmative defenses of modification and promissory estoppel. Specifically, Dealer asserted that a question of fact exists concerning whether Dealer "was induced to make certain payments" pursuant to Lee's statements and the February email and whether NextGear had "failed to comply with the terms of that agreement[.]" Id. at 125. In essence, Dealer argued that a genuine issue of material fact existed regarding whether NextGear had "caused [Dealer] to follow a plan which may have resulted in Dealer's alleged breach of the exact terms" of the Contract. Id. Dealer further asserted that there was a genuine issue of material fact with respect to whether NextGear had provided false information to Dealer's other lenders such that summary judgment was inappropriate on Dealer's counterclaims. In support of its opposition to NextGear's motion for summary judgment, Dealer designated the February email and Lollar's affidavit, in which Lollar stated that NextGear, through Lee, had proposed a plan to modify the Contract and that Lee had provided "assurances" to Lollar regarding the new plan. Id. at 137.

         [¶9] NextGear then filed a reply and supplemental evidence in support of its motion for summary judgment. In its reply, NextGear asserted that Dealer's affirmative defenses must fail because NextGear did not modify the Contract. It further asserted that there was no genuine issue of material fact regarding whether Dealer had breached the Contract because, as of March 30, 2016, Dealer's payments were "delinquent" on seven vehicles. Id. at 149. NextGear also reiterated its assertion that, because its statements to Dealer's other lenders were true and authorized by the Contract, Dealer did not raise a genuine issue of material fact as to either counterclaim. Following a hearing, the trial court entered summary judgment in favor of NextGear on NextGear's complaint and on Dealer's counterclaims. This appeal ensued.

         Discussion ...


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