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American Bank Center v. Barker

United States District Court, D. North Dakota

April 6, 2018

American Bank Center, Plaintiff,
v.
Stephen Barker, Defendant.

          ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

          Charles S. Miller, Jr., Magistrate Judge

         Before the court is American Bank Center (“ABC”)'s Motion for Summary Judgment, wherein ABC seeks judgment against Defendant Stephen Barker for amounts allegedly owed to ABC. (Doc. No. 6). Barker opposes the current motion. (Doc. No. 9).

         I. BACKGROUND

         This action stems from a serious of transactions related to the purchase/development of a hotel in Dickinson, North Dakota, during the height of the Bakken oil boom. Generally speaking, ABC entered into loan agreements with (1) Grand Dakota Partners, LLC and (2) Grand Dakota Hospitality, LLC, d/b/a Ramada Grand Dakota Lodge & Conference Center (collectively “Grand Dakota”). In consideration for these loans, the Grand Dakota entities executed promissory notes in favor of ABC. In further consideration, Barker, in his individual capacity, executed corresponding guaranties in favor of ABC. These agreements are detailed below. The following facts are either uncontested or are construed in Barker's favor for purposes of the current motion.

         A. Loan 60493401

         ABC and the Grand Dakota entities first entered into a loan agreement under which ABC agreed to lend a maximum amount of $8, 500, 000 with a variable interest rate. (Doc. No. 1-1 pp. 16-19). Barker signed the loan agreement in his capacity as President of Grand Dakota Partners, LLC and as the Managing Member of Grand Dakota Hospitality, LLC. Id. A notary public notarized the document as having been executed in Stark County, North Dakota on August 24, 2010. Barker also signed a promissory note on behalf of the Grand Dakota entities on August 24, 2010. (Doc. No. 1-1 pp. 13-15). He did so in the same capacities as the loan agreement. Id.

         More central to this litigation, Barker, in his individual capacity, also executed a guaranty on August 24, 2010, the same date as the other loan agreements. (Doc. No. 1-1 pp. 7-8). This guaranty provided Barker guaranteed “to [ABC] the payment and performance of each and every debt, liability and obligation of every type and description which [Grand Dakota] may now or at any time hereafter owe to [ABC], whether such debt, liability or obligation now exists or is hereafter created or incurred . . . .” (Doc. No. 1-1 p. 7). Barker's guaranty was “absolute, unconditional, and continuing . . . .” Id. Barker's guaranty was also for an unlimited amount, and Barker agreed to “pay or reimburse [ABC] for all costs and expenses (including reasonable attorneys' fees and legal expenses) incurred by [ABC] in connection with the protection, defense or enforcement of this guaranty in any litigation . . . .” Id. The document guarantees payment regardless of whether “any other person obligated to pay indebtedness, including [Grand Dakota], has such obligation discharged in bankruptcy or otherwise discharged by law.” Id. Barker further waived any right to presentment, and ABC could collect on Barker's guaranty without seeking collection from alternate sources. Id. Finally, the guaranty provided it “shall be governed by the laws of the State in which it is executed.” Id.

         On July 17, 2013, ABC and the Grand Dakota entities executed a debt modification agreement. (Doc. No. 1-1 pp. 20-21). This agreement changed the interest rate to be charged under the original loan agreement from a variable to a fixed rate. Id. It did not change any other provision of the loan agreement. Barker again signed the agreement in his capacity as President of Grand Dakota Partners, LLC and as the Managing Member of Grand Dakota Hospitality, LLC. Id.

         B. Loan 60493406

         Thereafter, ABC and the Grand Dakota entities executed a second loan agreement in the amount of $2, 500, 000 on December 30, 2014. (Doc. No. 1-1 pp. 26-30). Barker signed this document as President of Grand Dakota Partners, LLC and as the Managing Member of Grand Dakota Hospitality, LLC. Also on December 30, 2014, the Grand Dakota entities, with Barker as their respective signatory, executed a promissory note regarding the second loan agreement.

         Again germane to this litigation, Barker, in his individual capacity, also executed a guaranty on December 30, 2014. (Doc. No. 1-1 pp. 9-11). Under this guaranty, Barker guaranteed “the payment and performance of each and every Debt, of every type, purpose and description that [Grand Dakota] . . . may now or at any time in the future owe [ABC] . . . including without limitation all principal, accrued interest, attorneys' fees and collection costs . . . .” Id. The guaranty further provided Barker would “remain obligated to pay on this Guaranty even if any other person who is obligated to pay the Debt, including [Grand Dakota], has such obligation discharged in bankruptcy . . . .” Id. The guaranty further required Barker to pay all expenses incurred in collecting under the guaranty, to the extent permitted by law. (Doc. No. 1-1 p. 10). As is relevant here, the guaranty dictated that North Dakota law applied. Id. This was a change in wording from the prior guaranty, which provided that the law that governed was the place of its execution.

         C. Grand Dakota's Financial Problems

         Although the record is not clear as to the exact date, the Grand Dakota entities subsequently failed to make all payments required by the loan agreements and promissory notes. This failure constituted a default under the agreements. (Doc. No. 8-1). Each loan agreement had an acceleration clause allowing ABC to declare the outstanding balance and accrued interest due immediately, which ABC elected to invoke. Id. After this election, the Grand Dakota entities filed for bankruptcy sometime in 2017, though the record does not reflect the exact date.

         Barker has not paid ABC any amounts pursuant to either of the guaranties he executed. Id. ABC initiated this action to enforce both guaranties in state court, seeking judgment in the aggregate amount of $9, 851, 215.34. (Doc. No. 1-1 p. 5). This amount consisted of $9, 366, 108.49 in outstanding principal, $484, 656.85 in interest accrued as of May 1, 2017, and $450.00 in late fees. ABC also seeks interest that has accrued from May 1, 2017, through the present. Barker answered the complaint in state court on September 14, 2017. (Doc. No. 7-1). Barker removed this action to federal court on September 20, 2017. (Doc. No. 1).

         II. DISCUSSION

         ABC now seeks summary judgment as to its action on the two guaranties. ABC argues the guaranties are unambiguous and dictate Barker is liable for all amounts outstanding under the loan agreements. (Doc. No. 7). Barker opposes the motion, arguing this motion is premature and disputed issues of fact exist regarding the applicable law. (Doc. No. 9). The court and the parties are well-versed in the standard for summary judgment and the court need not repeat it here.

         A. Barker's Rule 56(d) Objection

         Barker argues summary judgment should not be granted because the case is still in its infancy and he has not conducted the discovery necessary to fully oppose the current motion. “Although discovery does not have to be completed before a district court can grant summary judgment, ‘summary judgment is proper only after the nonmovant has had adequate time for discovery.'” Ray v. Am. Airlines, Inc., 609 F.3d 917, 923 (8th Cir. 2010) (quoting In re TMJ Litigation, 113 F.3d 1484, 1490 (8th Cir.1997)). Under Fed.R.Civ.P. 56(d), the court may defer considering a motion for summary judgment or allow time to take discovery if a nonmoving party “shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition” to that motion. Under the discretion afforded by Rule 56(d), the court will not defer ruling on the current motion or grant other Rule 56(d) relief because Barker's objection fails on multiple levels.

         Barker's lack of compliance with the plain language of Rule 56(d) is the foremost of such problems. Specifically, Rule 56(d) requires the nonmoving party show the necessity of Rule 56(d) relief by “by affidavit or declaration . . . .” Barker has filed an affidavit in opposition to the current motion, but that affidavit does not speak to any of the factors relevant for the court to fashion Rule 56(d) relief. (Doc. No. 10 pp. 1-2). Additionally, although Rule 56(d) requires the nonmoving party show the necessity of relief with “specified reasons, ” Barker has only vaguely alleged in his brief in opposition to ABC's motion that, “at this point in the discovery process, Barker cannot fully present evidence supporting his opposition . . . .” (Doc. No. 9 p. 6). Aside from identifying his N.D.C.C. § 22-01-15 claims as possible defenses needing further discovery, which the court will address below, Barker has not identified any other specific issue or defense needing more discovery, and Rule 56(d) makes clear that he cannot rely on a hope or prayer further discovery might provide something of use. Accordingly, to the extent Barker's briefing constitutes a general objection under Rule 56(d), that objection is denied.

         To the extent Barker's Rule 56(d) objection can be winnowed down to his N.D.C.C. § 22-01-15 claims for possible exoneration, Barker again has not recited in his affidavit any relevant factors under Rule 56(d), and his Rule 56(d) objections still do not contain “specified reasons” why he cannot fully assert these claims at present. Looking past these procedural failings, Barker's Rule 56(d) objection also fails for lack of good cause. Barker's claims for possible exoneration under N.D.C.C. § 22-01-15 are both predicated on ABC taking some action possibly affecting the original obligations Barker guaranteed. Barker's plea for further discovery on these issues ignores the fact Barker had intimate involvement with the relationship between the Grand Dakota entities and ABC, making Barker privy to any information possibly providing exoneration under N.D.C.C. § 22-01-15. Indeed, Barker executed every document appearing of record on behalf of the Grand Dakota entities, including loan agreements, promissory notes, mortgages, etc. (Doc. Nos. 1-1 pp. 7-30; 11-2). He also, not surprisingly as the principal of the Grand Dakota entities, exhibited personal familiarity with requests for a work out of the Grand Dakota entities's debt problems, including reference to specific dates, as set forth in his affidavit. (Doc. No. 10). Barker's claim that he lacks the necessary knowledge to identify with specificity what additional information he needs to obtain by discovery material to the pending motion, notwithstanding being the principal of the Grand Dakota entities, is simply specious.[1]

         In summary, to the extent Barker raises a Rule 56(d) objection specifically as to his N.D.C.C. § 22-01-15 claims, that objection is denied on ...


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