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Bank of West v. Prince

United States District Court, W.D. Louisiana, Shreveport Division

June 7, 2018




          Elizabeth Erny Foot, Judge

         Pending before the Court are cross Motions for Summary Judgment [Record Documents 46 & 47] filed by Defendant, Danny K. Prince (“Prince”) and Plaintiff, Bank of the West (“BOW” or “the Bank”). For the reasons announced below, the Court DENIES both motions. The Court ORDERS additional briefing on matters addressed herein, and will hold a hearing to resolve remaining issues at a later date.


         Gladiator Energy Services, LLC, a Louisiana limited liability company, subsequently converted to a Texas limited liability company, GES Gladiator Energy Services of Texas, LLC (collectively “Gladiator” or “GES”) before it ceased doing business. See Record Documents 46-1 & 52. GES, as lessee, executed Master Lease Agreement No. 2530 (the “Lease”), effective May 13, 2014, in favor of Summit Funding Group, Inc. (“Summit”). In accordance with the Lease, GES executed Equipment Schedule No. 12 (the “Equipment Schedule”), under which it leased certain movable equipment (the “Equipment”) from Summit at a monthly base rent of $19, 819.41. Id. At that same time, Defendants Prince and Steven Cloy Gantt[1] ("Gantt") executed personal guaranties in favor of Summit. Summit later assigned its rights in and to the Lease and the Equipment Schedule to BOW. Id.

         GES defaulted on its payments under the Lease by failing to make the monthly payment in February of 2016. Id. GES voluntarily surrendered the leased Equipment to BOW on July 13, 2016, at GES's yard in Arcadia, Louisiana. Prince initially indicated, and BOW agreed, that at the time GES surrendered the Equipment to BOW, the amount of past due rent under the lease was $138, 735.87.[2] Id. However, in his opposition to BOW's Motion for Summary Judgment, Prince claims the actual amount owed as past due rent, based on a surrender date of July 13, 2016, is $118, 916.46. See Record Document 50-2; 50, pp. 8-9.[3] BOW represents that the Equipment was then sold, and the Bank recovered net proceeds in the amount of $320, 964.00. Record Document 47-1, p. 3.

         BOW filed this suit seeking to recover from Gantt and Prince amounts due under the Lease, plus costs and attorneys' fees. It moved for summary judgment in May 2017, Record Document 13, and this Court held a hearing on the motion in July 2017, see Record Document 30. The Court orally granted in part and denied in part BOW's motion. The Court found that BOW was entitled to a judgment against Prince for amounts owed by GES under the terms of the lease agreement, and granted the motion to that extent. The Court declined to declare an exact amount owed due to inconsistencies and uncertainties regarding the amount. Record Document 30, p. 2. The Court set a telephone conference and the parties were ordered to confer prior to the conference and attempt to resolve any uncertainties as to the specific amount owed. Id. Defendant retained new counsel and another telephone conference was set. See Record Document 34. At that conference, BOW was granted leave to file an amended complaint and Defendant raised new legal issues regarding the amount owed. Record Document 40. The Court set deadlines for BOW to file its amended complaint and for dispositive motions. Id. Now before the Court are cross motions for summary judgment regarding the amounts owed by Prince under the Lease.

         a. Plaintiff's Position

         Plaintiff argues that, under the terms of the Lease, it is entitled to: (1) recovery of the Equipment; (2) liquidated damages equal to the present value of the remaining payments due under the Lease, discounted at a rate of 2% per annum; and (3) attorneys' fees, expenses, and costs incurred by BOW in enforcing the Lease documents. BOW cites the Lease itself as the authority for recovery of these amounts. Specifically, the Lease provides:

Lessor may exercise one or more of the following remedies upon an Event of Default: . . . (iv) recover from Lessee all accrued and unpaid amounts, (v) recover from Lessee, as liquidated damages for loss of bargain and not as a penalty, the present value of all amounts to be paid by Lessee for the remainder of the Firm Term, or any successive period then in effect, discounted at the rate of 2% per annum, which amount will become immediately due and payable, (vi) demand that Lessee return the Equipment in strict compliance with the terms hereof . . . (xi) recover from Lessee all amounts incurred by Lessor in enforcing its rights and remedies hereunder, including, but not limited to, Lessor's repossession costs, transportation costs, storage costs, insurance costs, repair and maintenance costs, appraisal costs, remarketing costs and commissions, disposal costs, filing fees, reasonable attorneys' fees, and reasonable internal costs. . . .

         Record Document 47-3, p. 4. Additionally, the Lease provides that interest on unpaid recoverable amounts will accrue at a rate equal to the lesser of 1.5% per month and the highest rate allowed under applicable law. Id.

         The equipment has already been returned and sold at auction. Thus, BOW calculates the amount owed as follows:

Original Balance Due ($19, 819.41 x 46 months)

$911, 692.86

Less Payments Made (12 payments)

(237, 832.92)

Gross Remaining Balance (34 payments)

$673, 859.94

Liquidated Damages (34 payments at $19, 819.41 discounted at 2%)

$654, 592.79

Less Sales Proceeds

(320, 964.00)

Net Amount Owed

$333, 628.79

         Record Document 47-14, p. 11. BOW thus seeks summary judgment against Prince in the amount of $333, 628.79, plus interest at the rate of 1.5% per month from September 9, 2016[4] until paid, plus attorneys' fees and expenses, and costs incurred in enforcing the Lease and related documents.

         b. ...

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