Free Trial Brief - District Court of Arizona - Arizona

David N. Ingrassia (#010936) DAVID N. INGRASSIA, P.C. 1212 East Osborn Road Phoenix, Arizona 85012 Telephone: (602) 604-0099 Facsimile: (602) 604-0110 Attorney for Plaintiff IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA CITICAPITAL TECHNOLOGY FINANCE, INC., formerly known as EAB Leasing Corp., a Pennsylvania corporation, and CITICAPITAL COMMERCIAL LEASING CORPORATION, formerly known as Associates Leasing, Inc., an Indiana corporation, Plaintiffs, vs. GRANT H. GOODMAN AND TERI B. GOODMAN, husband and wife, Defendants. Plaintiffs', CitiCapital Technology Finance, Inc., and General Electric Capital Corporation (collectively "Plaintiffs") hereby submit this Trial Memorandum. I. PLAINTIFFS HAVE PROVEN THEIR DAMAGES Plaintiffs' damages are a matter of mathematical certainty. Ms. Bonnie Schlee testified that the damage calculations set forth in Exhibit 37 track the letter of the leases. Case No. CV03-01587 PHX JAT

PLAINTIFFS' TRIAL MEMORANDUM

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On a lease by lease basis, Ms. Schlee testified in great detail the presale past due charges, proper credit for the net proceeds from the equipment sales, proper credit for the monies received from the Court appointed Examiner in the GTI bankruptcy case, present value adjustments where applicable, final adjustment calculations where applicable, as well as supporting backup documentation. The leases and guarantees clearly spell out how damages are to be calculated. For the Court's ready reference, set forth below are selected provisions from the leases and guarantees at issue in this case. CitiCapital Lease Nos. 121 and 122 state the following (bold and italicized text for emphasis): "14. REMEDIES. Upon the occurrence of any Event of Default which continues for more than ten (10) days and at any time thereafter, Lessor shall have all remedies provide by law; and without limiting the generality of the foregoing and without terminating this Lease, Lessor, at its sole option, shall have the right at any time to exercise concurrently, or separately, without notice to Lessee (unless specifically stated), any one or all of the following remedies: (c) Declare the entire amount of rent and other sums payable hereunder immediately due and payable; however, in no event shall Lessor be entitled to recover any amount in excess of the maximum permitted by applicable law; *** "(e) Recover the sum of: (i) any accrued and unpaid rent, plus (ii) the present value of all future rentals reserved in the Lease and contracted to be paid over the unexpired term of the Lease, discounted at the rate of six percent (6%); plus, (iii) the anticipated residual value of the Property as of the expiration of this Lease or any renewal thereof; (iv) any indemnity payment, if then determinable; (v) all commercially reasonable costs and expenses incurred by Lessor in any repossession, recovery, storage, repair, sale, re-lease or other disposition of the Property, including reasonable attorneys' fees and costs incurred in connection therewith or otherwise resulting from Lessee's default (including any incurred at trial,

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on appeal or in any other proceeding); and (vi) the value of all tax benefits lost to Lessor as a result of Lessee's default or the enforcement by Lessor of any remedy; plus interest on each of the foregoing at a rate of fifteen percent (15.0%) per annum ("Default Interest"); and, (f) Lessor may, but is not required to, re-lease or sell any or all of the Property at a public or private sale on such terms and notice as Lessor shall deem reasonable. The proceeds of any sale or lease shall be applied in the following order of priorities: (i) to pay all of Lessor's expenses in taking, removing, holding, repairing and disposing of Property; then (ii) to pay any late charges and interest accrued; then (iii) to pay accrued but unpaid rent together with the anticipated residual value, future rent, interest and all other due but unpaid sums (including any indemnification and sums due under other Leases or agreements in default). Any remaining proceeds will reimburse Lessee for payments which it made to reduce the amounts owed to Lessor in the preceding sentence. Lessor shall keep any excess. If the proceeds of any sale or lease are not enough to pay the amounts owed to Lessor under this Section, Lessee shall pay the deficiency. No remedy referred to in this paragraph is intended to be exclusive, but shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity." Grant Goodman's Guaranty of Citicapital Lease Nos. 121 and 122 states the following (bold and italicized text for emphasis): *** "This Guaranty is unlimited, absolute, irrevocable and unconditional and shall continue in full force and effect until all the Obligations shall have been fully, completely and finally satisfied and paid. The obligations of each Guarantor hereunder shall continue and survive the repossession of any property or other property leased pursuant to the Agreements (or any property in which Creditor has a security interest securing any of the Obligations) whether or not any such repossession constitutes an "election of remedies" against the Obligor or any other person. Each Guarantor agrees to be obligated hereunder notwithstanding any termination of the Agreements in whole or part by operation of law or any unenforceability or invalidity of the Agreements for any reason whatsoever (including, without limitation, invalidity or voidness ab initio and/or partial or complete unenforceability as a result of impossibility or impracticability of

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performance or frustration of the purpose of the Agreements). The obligations of the Guarantors hereunder are joint and several and shall not be subject to any abatement, setoff, defense or counterclaim for any cause whatsoever. Each Guarantor hereby agrees that its obligations hereunder are direct and primary and that Creditor may proceed directly and in the first instance against each or any Guarantor or combination of Guarantors and have its remedy hereunder without first being obliged to resort to any other right or remedy or security for any of the Obligations. Each Guarantor hereby waives any right to require Creditor to proceed against the Obligor or to proceed against any other Guarantor or to proceed against any other guarantor of the Obligations. If there shall be any securities for any of the Obligations, or for the obligations of any Guarantor hereunder, or for the obligations of any other guarantor of any of the Obligations, Creditor may proceed against and/or enforce any or all of such securities in whatever order it may, in its sole discretion, deem appropriate. Any amount(s) received by Creditor from whatever source and applied by it to any of the Obligations shall be applied in such order of application as Creditor shall, in its sole discretion, elect." CitiCapital Lease Nos. 468 and 548 state the following (bold and italicized text for emphasis): *** DEFAULT: REMEDIES:

"22.

...(B) Upon the occurrence of an Event of Default which is not cured within ten (10) days of our written notice to you, we may, at our election and without any other notice, demand, exercise any one or more of the following remedies: ...(9) Terminate all Lease Availability, this Lease and/or any or all Schedules; (b) sue to enforce the performance of your Obligations under the Lease Documents and exercise any other right or remedy which may be available to us under the UCC or any other applicable law; (c) Declare immediately due and payable all sums due and to become due under all Lease Documents for the full remaining term (including any purchase option which you have contracted to pay); (d) Recover an amount which shall be defined as the "Lease Default Balance" which shall be the sum of (i) any accrued and unpaid rent due under all Lease Documents as of the date of entry judgment entered against you (or date of actual payment

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to us, whichever is earlier) plus late charges and other sums that may accrue under the Lease Documents; (ii) the present value of all unpaid future rentals remaining due under the Lease Documents discounted as the date of entry of judgment at a rate of five per cent (5%); (iii) all Collection Expenses as defined below incurred by us in connection with the collection of your obligations; (iv) estimated fair market value of the Equipment as of the expiration of the Lease Term of the applicable Schedule, and (v) any indemnity due under a Lease Document, if then determinable. (e) Require you to return any or all Equipment to us, or we (or our agent) may repossess any or all Equipment wherever found, which decision shall be in our sole and absolute discretion; (f) Following any repossession of Equipment, in our sole discretion, re-lease or sell any or all of the Equipment at a public or private sale on such terms and with or without notice, as we shall deem reasonable, at our place of business and recover from you damages, not as a penalty, but liquidated for all purposes and in an amount equal to the sum of: (i) the "Lease Default Balance", as calculated above, plus (ii) all commercially reasonable costs and expenses incurred by us any repossession, recovery, storage, repair, sale, re-lease or other disposition of the Equipment; LESS the amount we receive upon such public or private sale or lease of such items of Equipment, if any. (C) No remedy referred to in this Lease is intended to be exclusive, but shall be cumulative and in addition to any other remedy referred to above or otherwise available to us at law or in equity. You waive any rights which you may have to require us at any time to repossess any Equipment in mitigation of our damages. Our failure at any time to require strict performance of any of the terms and conditions contained in any of the Lease Documents will not waive or diminish any of our rights in the future to demand strict compliance and performance of any of the Lease Documents. Any waiver of any Event of Default will not waive or affect any other Event of Default whether past or future and no such waiver will be effective unless in writing." Grant Goodman's Guaranty of Citicapital Lease Nos. 468 and 548 states the following (bold and italicized text for emphasis): "Guaranty of Obligations: ...You agree that you are directly and primarily reliable, jointly and severally with Customer (and with all other guarantors of the Customer's Obligations), for performance of the Customer's Obligations...

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*** Unconditional Guaranty. Your liability under this Guaranty is absolute and unconditional, without regard to the liability of any other person, and shall not in any manner be affected by any action taken or not taken by us, which action or inaction is herein consented and agreed to. No delay in making demand on you shall prejudice our rights to enforce this Guaranty. All of our rights and remedies shall be cumulative any failure to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any time, and from time to time, thereafter. This Guaranty shall be continuing and shall be binding upon you regardless of how long before or after the date of this Guaranty any of the Customer's Obligations were or shall be incurred. This Guaranty shall continue in full force and effect until Customer's Obligations are fully paid, performed and discharged and we give you written notice of that fact." GE Lease Nos. 451, 453, 452 and 7004 state the following (bold and italicized text for emphasis): *** "2. LESSEE AGREES to pay Monthly Rental for each Vehicle in the amounts stated in the Schedule "A" applicable to such Vehicle. Such amounts shall be equal to the product of the Monthly Rental Factors stated in such Schedule for such Vehicle multiplied by the Schedule "A" Value of such Vehicle stated in such Schedule. The Monthly Rentals are subject to final depreciation adjustment as provided in Section 9 of this Lease, using a Final Adjustment Percentage which is stated in Schedule "B" applicable to such Vehicle. Schedule "A" Value as used herein shall mean the amount designated as such in the Schedule "A" of such Vehicle, representing the value of such Vehicle as determined by Lessor. Lessee acknowledges that Schedule "A" Values set forth in the Schedules are based upon the manufacturer's price and the amount of required equipment in effect on the date the Schedule is executed. If the manufacturer's price increases or decreases of (sic) if additional items of

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equipment are required on the Vehicle prior to or at the time of delivery of the Vehicle to Lessee, the Schedule "A" Value of such Vehicle will be adjusted by the amount of such increase or decrease and by the cost of Lessor of the additional equipment. In addition to the Monthly Rental, Lessee shall pay to Lessor upon demand and as Additional Rental all other charges payable by Lessee which have been paid by Lessor. Lessee also agrees to pay to Lessor, at the time each Vehicle is delivered, the amount of any Advance Rentals noted in the Schedule applicable to such Vehicle. All Advance Rentals shall be held by Lessor and provided Lessee is not in default, applied to the payment of the last Monthly Rentals which are due for the Vehicle to which they relate. If Lessee is in default Lessor may apply the Advance Rentals to any of Lessee's obligations hereunder as Lessor in its sole discretion may determine. No interest shall accrue to Advance Rentals. *** 8. LESSEE SHALL RETURN each Vehicle to Lessor, at Lessee's expense, at the expiration or termination of this Lease in relation to such Vehicle at the location where delivery was made or at such other location as is designated by Lessor in the same working order, condition and repair as when received by Lessee, excepting only reasonable wear and tear caused by normal usage of such Vehicle, together with all license plates, registration certificates, or other documents relating to such Vehicle. ... After said return, Lessor shall cause such Vehicle to be sold at public or private sale, at wholesale, for the highest cash offer received and still open at the time of sale. The "net sale proceeds" for said Vehicle shall be the net amount received and paid to Lessor after deducting the cost of sale, the cost of cleaning, repairing, equipping or transporting said Vehicle and any other expense or Lessor in connection therewith. 9. FINAL ADJUSTMENT for each Vehicle will be made upon receipt of the net sale proceeds therefore and, unless any default shall have occurred and except as provided below; Lessor shall pay to Lessee the amount, if any, by which the sum of (a) the net sale proceeds, and (b) surplus insurance recoveries, if any, on such Vehicle, exceeds (c) a Final Adjustment Amount, as defined herein, for such Vehicle calculated as of the rental payment date next preceding the date such Vehicle was returned to Lessor (referred to hereafter as the "Calculation Date"). The Final Adjustment Amount for any Vehicle as of a Calculation Date shall be computed by multiplying the Schedule "A" Value for such Vehicle by that percentage ("Final Adjustment Percentage") opposite the respective Calculation Date as set forth in the Final Adjustment Table attached

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hereto as Schedule B. If the sum of items (a) and (b) is less than item (c), Lessee shall, within ten days after notice thereof, pay the deficiency to Lessor as Adjusted Rental without abatement, off-set or counterclaim arising out of any circumstance whosoever. Lessor shall promptly determine the aforesaid amounts and shall render statements therefore to Lessee. Lessor may apply any sums received as proceeds from any Vehicle which would otherwise be due to Lessee hereunder against any other obligation of Lessee and Lessor may off-set the amount of any such rental adjustment against any claim it may have against Lessee. *** 14B. LESSOR'S REMEDIES: (1) In the event of such default described above, Lessor shall have no further obligation to lease vehicles to Lessee and, at the option of Lessor, all rights of Lessee hereunder and in and to the Vehicles shall forthwith terminate. Upon such termination Lessee agrees that Lessor may, with or without notice to Lessee, take possession of any or all Vehicles (with or without legal process) or require Lessee to return all Vehicles forthwith to Lessor at such location as Lessor shall designate. Lessee authorizes Lessor and Lessor's agents to enter any premises where the Vehicles may be found for the purpose of repossessing the same. If Lessor retakes possession of any of the Vehicles and at the time of such retaking there shall be in, upon, or attached to the Vehicles any property, goods, or things of value belonging to Lessee or in the custody or control of Lessee, Lessor is hereby authorized to take possession of such property, goods, and things of value and hold the same for Lessee or to place such property, goods, or things of value in public storage for the account of, and the expense of, Lessee. Lessor may at its option (i) sell any or all of the Vehicles which are returned or repossessed pursuant to this Section and hold Lessee liable for Adjusted Rental as provided in Section 9, or (ii) lease any or all of the Vehicles to a person other than Lessee for such term and such rental as Lessor may elect in its sole discretion, and apply the proceeds of such lease, after first deducting all costs and expenses relating to the termination of this Lease and the retaking of the Vehicles, to Lessee's obligations hereunder; provided, however, that Lessee shall pay to Lessor immediately upon demand, as liquidated damages for loss of bargain and not as a penalty, a sum with respect to each such Vehicle which represents the excess of the present value at the time of termination of all Monthly Rentals which would otherwise have accrued hereunder to the end of the Maximum Term for such Vehicle over the present value of the aggregate of the rentals to be paid for such Vehicle by such third party for such period (such present

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values to be computed in each case on the basis of a discount factor equal to the Prime Rate in effect on the date this Lease is terminated by Lessor, from the respective dates upon which such Monthly Rentals would have been payable hereunder had this Lease not been terminated). In addition to the other remedies set forth herein, if any Vehicle is not returned to Lessor, or if Lessor is prevented from taking possession thereof, Lessee shall pay to the Lessor immediately upon demand Adjusted Rental as provided in Section 9, as if such Vehicle had been sold on the date this Lease was terminated, and the amount of net sale proceeds therefore were zero. As used herein, the Prime Rate shall mean the Prime Rate as published from time to time in the Money Rates section of The Wall Street Journal as the base rate on corporate loans. If more than one Prime Rate or a range of rates is published, the Prime Rate will be the highest of the published rates. In the event the Prime Rate is published in The Wall Street Journal ceases to exist or The Wall Street Journal ceases publishing a Prime Rate, CitiCapital will substitute a comparable index which is outside the control of CitiCapital. In the event of an error by The Wall Street Journal, the Prime Rate will be based upon the Prime Rate as corrected. Lessor may sell any Vehicle without giving any warranties as to the Vehicle. Lessor may disclaim any warranties of title, possession, quiet enjoyment, or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Vehicle. (2) Whether or not the Vehicles are returned to, sold or leased by Lessor, Lessor shall also recover from Lessee all unpaid Monthly Rentals, Additional Rents and Adjusted Rents then due or owing together with all costs and expenses, including attorneys' fees, incurred by Lessor in the enforcement of its rights and remedies under this Lease. In addition, Lessor may retain as liquidated damages all Monthly Rentals and Additional Rents and sale proceeds received, including any refunds and other sums which otherwise would be payable to Lessee, and a sum equal to the aggregate of all Monthly Rentals and other amounts, including but not limited to any early termination fee customarily charged by Lessor, (the due dates of which Rentals and other amounts Lessor may accelerate at its option) which would have been due during the period ending, for each Vehicle, on the earliest date on which Lessee could have effectively terminated this Lease as to such Vehicle pursuant to Section 3 if Lessee had not defaulted. (3) The remedies in this Lease provided in favor of Lessor shall not be deemed exclusive or alternative, but shall be cumulative and shall be in addition to all other remedies in its favor existing at law or in equity. Lessee hereby waives any right to trial by jury in any action relating to this Lease, as well as any requirements of law, now or hereafter in effect, which

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might limit or modify any of the remedies herein provided, to the extent that such waiver is permitted by law. The failure of Lessor to exercise any of the rights granted it hereunder shall not constitute a waiver of any such right or establish a custom or course of dealing." Grant and Teri Goodman's Guaranty of GE Lease Nos. 451, 452, 453, and 7004 states the following (bold and italicized text for emphasis): "For valuable Consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned, for themselves, their heirs, executors, personal representatives, successors and assigns (individually called" Guarantors") jointly and severally and in solido, hereby unconditionally guarantee to Associates Leasing, Inc., its successors, endorsees and assigns (collectively called" CitiCapital") that GTI Capital Holdings, LLC dba Rockland Materials (the "Company"), whose address is 3636 South 43rd Avenue Phoenix, AZ 85009 shall promptly and fully perform, pay and discharge all of its present and future liabilities, obligations and indebtedness to CitiCapital, whether direct or indirect, joint or severally, absolute or contingent, secured or insecured, matured or unmatured and whether originally contracted with or otherwise acquired by Citicapital (all of which liabilities, obligations and indebtedness are herein individually and collectively called the indebtedness"). This Guaranty is an absolute an unconditional guarantee of payment and not of collectibility. The liability of each Guarantor hereunder is not conditional or contingent upon the genuineness, validity, sufficiency or enforceability of the indebtedness or any instruments, agreements or chattel paper related thereto (collectively called "Agreements") or any security or collateral therefore (collectively called "Security") or the pursuit by CitiCapital of any rights or remedies which it now has or may hereafter have. If the Company fails to pay the indebtedness promptly as the same becomes due, or otherwise fails to perform any obligation under any of the Agreements, each Guarantor agrees to pay on demand the entire indebtedness and all losses, costs, attorneys' fees and expenses which may be suffered by CitiCapital by reason of the Company's default or the default of any Guarantor hereunder, and agrees to be bound by and to pay on demand and to pay on demand any deficiency established by the sale of any of the Agreements or Security, all without relief from valuation and appraisement laws and without requiring CitiCapital to (i) proceed against the Company by suit or otherwise, (ii) foreclose, proceed against, liquidate or exhaust any of the Agreements or Security, or (iii) exercise, pursue or enforce any right or remedy CitiCapital

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may have against the Company, any co-Guarantor (whether hereunder or under a separate instrument) or any other party." Accordingly, Plaintiffs seek Judgment against the Defendants as follows: 1. 2. In favor of Citicapital and against Defendant Grant Goodman in the amount of In favor of GE and against Defendants Grant Goodman and Teri Goodman in the $141,909.93, together with interest until paid in full, attorney's fees, and costs. amount of $214,920.27, together with interest until paid in full, attorney's fees, and costs.

II.

THE EQUIPMENT SALES WERE CONDUCTED IN A COMMERCIALLY

REASONABLE MANNER.

Mr. Roger Doyle testified concerning his responsibilities for the recovery, storage, inspection, valuation, remarketing and sale of used equipment. His 14 plus years of experience in selling used equipment speaks for itself. Mr. Doyle testified that his compensation is based upon maximizing sale proceeds. He testified that after having extensively reviewed the Condition Reports prepared by Property Damage Appraisers (Exhibits 11-18), after having personally inspected the Leased Equipment (except for the Lease No. 548 Equipment), after having extensively reviewed certain valuation publications, including but not limited to the Black Book Official Used Heavy Duty Truck Guide, after having consulted with several agencies who re-market like kind used equipment, and after having assessed the age, condition, and the technology of the equipment, he was of the opinion that as of the date of recovery and sale, the Leased Equipment had a fair market value of no more than $560,000.00. Ms. Schlee testified that all interested parties, including the Defendants were provided with notices of sale (Exhibits 34D, 34E, 34F, 34G, 34H, 34I, 34J).

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Mr Doyle testified that prior to the auction sales, Nationwide advertised the sales in

Truckpaper, a newspaper whose circulation nationwide is over 700K. Mr Doyle testified that
prior to the auction sales, Nationwide emailed notice of the sale to 35-50K target buyers

nationwide. Mr Doyle testified that prior to the auction sales, Nationwide sent 5K-10K flyers to target buyers nationwide. Mr Doyle testified that prior to the auction sales, Nationwide provided internet access to sale ads. Mr Doyle testified that prior to the sales, he personally telephoned dealers of the sales.
Mr Doyle testified about the buyers at the sales and how the sales were conducted. He testified that he did not sell certain equipment if the offering price was not high enough. The bottom line here is that the equipment sales were conducted in a commercially reasonable manner.

III.

PLAINTIFFS DISAGREE WITH THE DEFENDANTS' POSITION ON THE

LAW AS CITED IN DEFENDANTS TRIAL MEMORANDUM It is the Plaintiffs' position that they disagree with Defendants position on the law as cited in Defendants Trial Memorandum filed with the Court yesterday afternoon. Plaintiffs do not wish to over burden the Court with case authority on issues which this Court may deem irrelevant and/or unnecessary to the Court's decision. However, if the court deems it necessary, Plaintiffs will provide this Court with legal authority supporting their position on the law.

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RESPECTFULLY submitted this 28th day of June, 2006.

DAVID N. INGRASSIA, P.C.

/s/ David N. Ingrassia David N. Ingrassia 1212 E. Osborn Road Phoenix, AZ 85014 Attorney for Plaintiff

Copy of the foregoing emailed/mailed this 28th day of June, 2006, to: Grant Goodman Grant H. Goodman PC 5110 N 44th Street, Suite L200 Phoenix, AZ 85018 Email: [email protected] Copy of the foregoing mailed this 28th day of June, 2006, to: Honorable James A. Teilborg United States District Court 401 W. Washington Phoenix, AZ 85003 /s/ Maddy Garcia

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