Asia Pacific Properties & Hotels Inc v. Tallahassee Capital Hospitality Inc et al

MOTION for Summary Judgment

N.D. Fla.April 10, 2017

29428659 v1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF FLORIDA, TALLAHASSEE DIVISION ASIA PACIFIC PROPERTIES & HOTELS, INC., a California corporation, Plaintiff, vs. TALLAHASSEE CAPITAL HOSPITALITY, LLC, a Florida limited liability company, Defendant. _______________________________/ Case No. 4:16-cv-525-RH-CAS PLAINTIFF’S MOTION FOR FINAL SUMMARY JUDGMENT Plaintiff, ASIA PACIFIC PROPERTIES & HOTELS, INC. (“Plaintiff”), by and through its undersigned attorneys, and pursuant to Rule 56 of the Federal Rules of Civil Procedure, moves for entry of a final summary judgment on all Counts of the Verified Complaint, and in support states as follows: UNDISPUTED FACTS I. The Loan and Loan Documents. 1. On March 31, 2014, Access Point Financial, Inc., a Delaware corporation (“Access Point”), made a loan to Defendant Tallahassee Capital Hospitality, LLC (“Defendant”) in the original principal amount of $1,800,000.00 Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 1 of 13 -2- (the “Loan”), which Loan is evidenced by that certain Promissory Note executed by Defendant, dated March 31, 2014, in the same amount (the “Note”). VC, ¶ 10; VC, Ex. A; Answer, ¶ 10 (Admitted that Defendant signed a promissory note).1 2. As security for the Note, on or about March 31, 2014, Defendant executed and delivered to Access Point that certain Equipment Loan and Security Agreement (“Security Agreement”), pursuant to which Defendant pledged as collateral for the Note certain personal property, furniture, fixtures, and equipment, as more specifically set forth on Exhibit B to the Security Agreement (the “Personal Property Collateral”). VC, ¶ 13; VC, Ex. B. (The Note, Security Agreement, and all other documents executed in connection with the Loan are referred to herein as the “Loan Documents.”) 3. On or around April 25, 2014, the Loan was modified, for among other reasons, to reduce the maximum principal amount of the Loan from $1,800,000.00 to $1,425,000.00. VC, ¶ 14; VC, Ex. C; Answer, ¶ 14 (admitting there was a modification). 4. On May 12, 2014, Access Point perfected its security interest in the Personal Property and Revenues by filing a UCC-1 Financing Statement with the Florida Secretary of State, document number 201401405922 (the “Financing Statement”). VC, ¶ 15; VC, Ex. D; Answer, ¶ 15 (stating Tallahassee Capital is 1 The Verified Complaint filed in this action shall be abbreviated as “VC.” Defendant Tallahassee Capital Hospitality, LLC’s Answer (Doc. No. 14) is referred to as the “Answer.” Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 2 of 13 -3- “without knowledge, therefore denied”). 5. On or around November 4, 2014, the Loan was again modified to extend the draw period through January 31, 2015, and to approve a change in ownership of Defendant. All other terms remained the same. VC, ¶ 20; VC, Ex. G; Answer, ¶ 20 (admitting there was a modification). 6. On or around June 23, 2015, the Loan was again modified to extend the interest only period for six (6) months beginning with the June 1, 2015 payment, and to allow for a change in management companies from Infinity Management, an entity related to Defendant, to a third party management company. All other terms remained the same. VC, ¶ 22; VC, Ex. H; Answer, ¶ 22 (admitting there was a modification). 7. As set forth in the Verified Complaint, through a series of assignments and endorsements/allonges to the Note, Access Point, as Master Servicer for Access Point Funding I 2015-A, LLC, a Delaware limited liability company (“Access Point Funding”), was the owner and holder of the Note and Security Agreement entitled to enforce the terms thereof as of the date APF filed the Verified Complaint. VC, ¶ 16-19; 21; 23-26; 28; VC, Exs. A, E, F, I, J, L. II. Defendant’s Defaults under the Loan and Loan Documents. 8. Defendant has defaulted under the terms of the Note, as modified, by, among other things, failing to make the monthly payments due in November 2015 Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 3 of 13 -4- and all payments that became due subsequent thereto (the “Payment Defaults”). VC, ¶ 29. 9. In addition to the Payment Defaults, and among other defaults under the Security Agreement, Defendant has defaulted under the Note and Security Agreement by: (i) failing to complete the renovations and improvements of the Hotel within the allotted draw-down period of the Loan (Security Agreement, § 3(d) (VC, Ex. B)); (ii) failing to furnish Access Point and APF within 120 days after end of Defendant’s fiscal year with (a) an annual operating statement for the Location Premises and (b) an annual balance sheet, profit and loss statement, and source and application of funds of Defendant, all of which shall be certified by Defendant to be true, complete, and accurate (Security Agreement, § 10(j)); (iii) failing to cause the guarantors of the Loan to furnish within 120 days after the end of Defendant’s fiscal year a copy of each guarantor’s prior year federal income tax return and a certified net worth statement (Security Agreement, § 10(j)); (iv) failing to provide the Borrower Certificate at the end of each calendar quarter since and including the fourth calendar quarter 2014, in the Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 4 of 13 -5- form of Exhibit C to the Security Agreement, wherein Defendant was required to certified to Access Point or APF: (a) the quarterly management prepared financial statements are true and correct, (b) the STR Report is based on current competitive set and is an accurate picture of the performance of the Hotel, and (c) the Hotel is current on the franchise fees with the Defendant’s franchisor and, otherwise, not in default of any of its obligations under the franchise agreement (Security Agreement, § 10(p)); (v) failing to provide Access Point or APF with proof that the renovations and improvements listed on the Replacement Cost Report attached as Exhibit B to the Security Agreement were substantially completed (Security Agreement, § 12(l)); and (vi) failing to maintain its brand and franchise for the Hotel (Security Agreement, § 12(m)) (collectively, the “Other Defaults”). VC, ¶ 30. 10. On February 19, 2016, APF delivered a letter to Defendant (the “Default Notice”) declaring Defendant in default of the Note and Security Agreement due to the aforementioned Payment Defaults and Other Defaults, among other things, and demanding immediate payment of all amounts due and owing under the Note. VC, ¶ 31; VC, Ex. M. 11. As of the date of the Verified Complaint, Defendant had failed to pay, Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 5 of 13 -6- and continues to fail to pay, the amounts due and outstanding under the Note. VC, ¶ 32. 12. As of the date of the Verified Complaint, Defendant had failed to cure any of the Other Defaults. VC, ¶ 33. 13. As of April 10, 2017, there is due and owing to Plaintiff under the Note $1,628,597.21, comprised of the principal amount of $1,238,385.83, plus accrued interest at the non-default rate (7.5%) from October 1, 2015 through April 10, 2017, in the amount of $157,534.30, plus additional accrued interest at the default rate (10.5% above the non-default rate) from November 1, 2015, through April 10, 2017, in the amount of $205,188.64, plus late fees and other fees in the amount of $27,488.44, along with all other principal, fees, including attorneys’ fees and costs, interest, which shall continue to accrue on the outstanding principal balance at the per diem rate of $619.20, and other charges due under the Note, (collectively, the “Indebtedness”). Attached hereto as Exhibit A is the affidavit of Sukhdev Singh, President of Asia Pacific Properties & Hotels, Inc., averring to the outstanding amount of Indebtedness owed to Plaintiff (the “Singh Affidavit”). 14. Plaintiff has retained the undersigned counsel to represent its interest in this action and is obligated to pay counsel reasonable fees and costs. Obligors are obligated to pay such attorneys’ fees and costs incurred by Plaintiff under the terms of the Note and Mortgage. Note, § 6.A. (VC, Ex. A); Security Agreement, Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 6 of 13 -7- § 10(m) (VC, Ex. B). 15. On October 14, 2016, Defendant filed its Answer (Doc. No. 14). Tallahassee Capital has not raised any affirmative defenses to the Verified Complaint. 16. The Answer contains only general denials of certain allegations of the Verified Complaint and is not verified. 17. On or around December 12, 2016, Plaintiff acquired the Loan, Note, and Security Agreement from Access Point Funding. Singh Affidavit, ¶ 5-7. 18. As a result of the Asia Pacific Allonge, Plaintiff is the owner and holder of the Note and Security Agreement entitled to enforce the terms thereof. Sing Affidavit, ¶ 8. 19. On February 8, 2017, this Court entered its Order Substituting Plaintiffs and Directing the Clerk to Set a Status Conference (Doc. No. 21), pursuant to which the Court granted APF’s motion for substitution of party plaintiff (Doc. No. 19), and substituted Plaintiff for APF as the sole plaintiff in this action and deeming Plaintiff APF’s successor-in-interest for purposes of all prior proceedings and orders in this action. MEMORANDUM OF LAW A. Summary Judgment Standard. The Court may enter summary judgment when “there is no genuine dispute Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 7 of 13 -8- as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). “[T]he court must view all evidence and make all reasonable inferences in favor of the party opposing summary judgment.” Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995). The Court should grant summary judgment unless the party opposing the motion can establish evidence that, when considered in light of that party’s burden of proof at trial, could provide a basis for a jury finding in the non-moving party’s favor. See J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir. 1987). B. Plaintiff is entitled to summary judgment on Count I of the Verified Complaint (Breach of Note). As an initial matter, Florida substantive law applies because this case is before the Court on diversity jurisdiction, and the personal property being foreclosed upon is situated in Florida. See, e.g., Admiral Ins. Co. v. Feit Management Co., 321 F.3d 1326, 1328 (11th Cir. 2003). Under Florida law, the elements of a breach of contract claim are (1) a valid contract, (2) a material breach Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 8 of 13 -9- of the contract, and (3) damages. See, e.g., Beck v. Lazard Freres & Co., LLC, 175 F.3d 913, 914 (11th Cir. 1999); Miller v. Nifakos, 655 So. 2d 192, 193 (Fla. 4th DCA 1995). The undisputed facts, as established by the Verified Complaint and the Singh Affidavit, entitle Plaintiff to summary judgment on its breach of note claim against Defendant.2 Defendant does not dispute that it signed the Note. Answer, ¶ 10. Defendant is therefore bound by the repayment terms contained therein. Defendant also cannot dispute that it has materially breached the terms of the Note. Defendant stopped making payments due under the Note as of November 2015, which was a material breach. VC, ¶ 29, 32. Defendant further materially breached the Note through the Other Defaults. VC, ¶ 30, 33. Through the Default Notice, APF provided notice to Defendant of the Payment Defaults and the Other Defaults. VC, ¶ 31. Defendant failed to timely cure the Payment Defaults and the Other Defaults as set forth in the Default Notice, as such defaults remained outstanding as of the date of filing the Verified Complaint in this action, nearly seven (7) months after APF served the Default Letter. VC, ¶¶ 32-33. As a result of Defendant’s defaults under the Note, Plaintiff has sustained damages in the amount of the Indebtedness, which continues to accrue principal, interest, and 2 “A verified complaint may serve the same purpose as an affidavit supporting or opposing a motion for summary judgment.” Ballinger v. Bay Gulf Credit Union, 51 So. 3d 528, 529 (Fla. 2d DCA 2010) (quoting Boettcher v. IMC Mortg. Co., 871 So. 2d 1047, 1049 n.2 (Fla. 2d DCA 2004)). Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 9 of 13 -10- fees. Singh Affidavit, ¶ 11. Accordingly, there is no genuine issue of disputed fact that would preclude summary judgment in favor of Plaintiff on Count I of the Verified Complaint. C. Plaintiff is entitled to summary judgment on Count II of the Verified Complaint (Foreclosure of Security Interest). The undisputed facts, as established by the Verified Complaint and the Singh Affidavit entitle Plaintiff to summary judgment on Count II, foreclosure of its security interest in the Personal Property Collateral. Pursuant to § 679.601, Florida Statutes, after a default under a security agreement, a secured party may judicially foreclose on the collateral covered by a security agreement. See also Spellman v. Independent Bankers’ Bank of Florida, 161 So. 3d 505, 508 (Fla. 5th DCA 2014) (“Under section 679.601(1)(a), Florida Statutes (2009), after a debtor defaults, a secured party may reduce a claim to judgment, foreclose, or otherwise enforce the claim.”). Defendant does not dispute that the Note and Security Agreement are contracts that they signed. Answer, ¶¶ 10, 13. Defendant also does not dispute that APF was the owner and holder of the Note and Security Agreement with standing to enforce their terms as of the date the Verified Complaint was filed (Answer, ¶ 36 (“without knowledge, therefore denied”)). Plaintiff has established that it is the current owner and holder of the Note and Security Agreement, entitled to enforce the terms thereof, through the Singh Affidavit. Obligors are therefore Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 10 of 13 -11- bound by the repayment terms and the remedies upon default contained therein. Defendant also cannot dispute that it has materially breached the terms of the Note. Obligors stopped making payments due under the Note as of November 2015, which was a material breach. VC, ¶ 29. Defendant further materially breached the Note through the Other Defaults. VC, ¶ 30. Due to the aforementioned numerous material defaults under the Note and Security Agreement, Plaintiff is entitled under the Security Agreement to foreclose on the Personal Property Collateral, as described in the Verified Complaint and the Security Agreement. Security Agreement, Ex. C. (VC, Ex. B).3 Accordingly, there is no genuine dispute of fact that would preclude summary judgment in favor of Plaintiff on Count II of the Verified Complaint. D. Plaintiff is entitled to recover its attorneys’ fees and costs. Plaintiff is also entitled to recover its attorneys’ fees and costs under the express terms of the Note and Security Agreement. Note, § 6.A. (VC, Ex. A); Security Agreement, § 10(m) (VC, Ex. B). Florida law clearly allows the foreclosing party to recover such fees and costs when the loan documents provide for such recovery. See Porter Interests of Florida v. Missouri State Life Ins. Co. of St. Louis, Mo., 105 Fla. 550, 552-553, 141 So. 741, 742 (Fla. 1932). Accordingly, 3 This Court has granted Plaintiff summary judgment in the companion mortgage foreclosure case based on nearly identical allegations of Defendant’s defaults. Case No. 4:16cv268-RH/CAS, Doc. No. 78. Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 11 of 13 -12- Plaintiff requests this Court determine as part of its summary judgment order that Plaintiff is entitled to its reasonable attorneys’ fees and costs under the Note and Security Agreement. Pursuant to Local Rule 54.1, upon an order from this Court entitling Plaintiff to its attorneys’ fees, Plaintiff shall file a motion to determine the amount of such reasonable fees and costs. WHEREFORE, Plaintiff, ASIA PACIFIC PROPERTIES & HOTELS, INC., moves for entry of an Order granting summary judgment in its favor on all counts of the Verified Complaint, determining Plaintiff is entitled to its reasonable attorneys’ fees and costs as provided in the Note and Security Agreement, and for such further relief as this Court deems just and proper. Respectfully submitted this 10th day of April, 2017. /s/ Christopher R. Thompson Peter C. Vilmos, Esq. Florida Bar Number: 075061 Primary Email: pvilmos@burr.com Christopher R. Thompson, Esq. Florida Bar Number: 0093102 Primary Email: crthompson@burr.com BURR & FORMAN LLP 200 S. Orange Avenue, Suite 800 Orlando, FL 32801 Telephone: (407) 540-6600 Facsimile: (407) 540-6601 ATTORNEYS FOR PLAINTIFF Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 12 of 13 -13- Local Rule 56.1(F)/7.1(F) Certificate of Word Count Undersigned counsel hereby certifies that the word count for this Motion and Memorandum of Law is 2,458, including headings. /s/ Christopher R. Thompson Christopher R. Thompson, Esq. Florida Bar Number: 0093102 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on April 10, 2017, a copy of the foregoing was filed via the Court’s CM/ECF system, which will provide notice to all parties receiving electronic notice, including: Danielle Kelley, Esq., a/f Defendant, at danielle@dkelleylaw.com. /s/ Christopher R. Thompson Christopher R. Thompson, Esq. Case 4:16-cv-00525-RH-CAS Document 29 Filed 04/10/17 Page 13 of 13 Case 4:16-cv-00525-RH-CAS Document 29-1 Filed 04/10/17 Page 1 of 5 Case 4:16-cv-00525-RH-CAS Document 29-1 Filed 04/10/17 Page 2 of 5 Case 4:16-cv-00525-RH-CAS Document 29-1 Filed 04/10/17 Page 3 of 5 Case 4:16-cv-00525-RH-CAS Document 29-1 Filed 04/10/17 Page 4 of 5 Case 4:16-cv-00525-RH-CAS Document 29-1 Filed 04/10/17 Page 5 of 5