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CIT Bank, N.A. v. Howard Transportation, Inc.

United States District Court, E.D. Louisiana

January 13, 2020

CIT BANK, N.A.
v.
HOWARD TRANSPORTATION, INC. ET AL.

         SECTION: “H”

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendants' Motion for Partial Summary Judgment (Doc. 87); Plaintiff's Motion for Partial Summary Judgment (Doc. 93); Defendants' Motion for Discovery pursuant to Rule 56(d) (Doc. 103). For the following reasons, the Motions for Partial Summary Judgment are GRANTED IN PART, and Defendants' Motion for Discovery is DENIED.

         BACKGROUND

         This consolidated action arises out of two lease agreements for tractor trailer-trucks. In the first, Hibernia National Bank (later acquired by Plaintiff CIT Bank, N.A. (“CIT”)) entered into a lease with Defendant Howard Transportation, Inc. (“HT”) of 50 Western Star tractor trucks (the “HT Lease”). Defendant Howard Industries, Inc. (“HI”) guaranteed HT's indebtedness. Under the terms of the HT Lease, HT made 49 monthly lease payments, and the agreement terminated on January 15, 2017. Prior to the expiration of the lease, two of the trucks leased by HT were determined to be a total loss, and HT paid CIT the stipulated loss value of those trucks. On January 13, 2017, HT returned all remaining 48 trucks to 107 Nehi Street, Ellisville, Mississippi, the delivery location designated in the HT Lease (the “Delivery Location”). CIT picked up 46 of the trucks in November 2017 and the remaining two trucks in February 2018.

         In July 2014, HT entered into a separate agreement to lease eight additional trucks from CIT. The agreement called for 49 monthly payments ending on September 1, 2018 (the “HT2 Agreement”). The lease of these trucks was covered by the provisions of the HT Lease and the HT2 Agreement. HT returned these trucks upon termination of the agreement to the Delivery Location. CIT retrieved the trucks in October 2018.

         In July 2014, Defendant Howard Dedicated Operations, Inc. (“HDO”) entered into a lease agreement with Capital One Equipment Finance Corp. for the lease of 15 Western Star tractor trucks (“the HDO Lease”). That agreement was later assigned to Plaintiff CIT. The HDO Lease called for 37 monthly payments and terminated on September 1, 2017. Prior to the end of the lease, HDO returned all of the trucks to the Delivery Location. CIT picked the trucks up in February 2018.

         CIT brings breach of contract claims against HT, HI, and HDO (collectively “Howard”), arguing that they failed to return the trucks in the condition required by the HT Lease, the HT2 Agreement, and the HDO Lease (“the Leases”). CIT seeks reimbursement for the cost of necessary repairs, storage, and transportation. In its prior Motion for Partial Summary Judgment, Howard moved for a judgment dismissing CIT's claims for lease payments accruing after the termination of the Leases. This Court granted that Motion, holding that, pursuant to the Leases, lease payments were owed only until the trucks were returned to the Delivery Location and that CIT was therefore not entitled to additional lease payments.

         Howard brings counterclaims against CIT alleging that it breached the Leases by failing to timely take delivery of the trucks and by charging additional rental payments. Howard also alleges that CIT committed the tort of trespass by storing its trucks after the termination of the Leases on property owned by HT without HT's permission.

         There are three motions currently before the Court. First, Howard brings a second Motion for Partial Summary Judgment, seeking summary judgment on its claims for breach of contract, trespass, and the return of unlawful withdrawals. It also seeks dismissal of CIT's claim for post-termination storage and transportation costs. Second, CIT seeks partial summary judgment on its claim that Howard breached the Leases. Finally, Howard moves for additional time to conduct discovery to adequately respond to CIT's motion.

         LEGAL STANDARD

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”[1] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[2]

         In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor.[3] “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.”[4] Summary judgment is appropriate if the non-movant “fails to make a showing sufficient to establish the existence of an element essential to that party's case.”[5] “In response to a properly supported motion for summary judgment, the non-movant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the non-movant on all issues as to which the non-movant would bear the burden of proof at trial.”[6] “We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[7] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[8]

         LAW AND ANALYSIS

         I. Howard's Partial Motion for Summary Judgment

         Howard move for summary judgment on three separate issues. First, it seeks judgment that CIT breached the Leases and committed a trespass on its property when it failed to remove its trucks from HT's facility after the termination of the Leases. Second, it seeks judgment in the amount of $93, 270.02 for two unlawful debits from its account by CIT for post-termination lease payments that were not owed. Third, Howard seeks dismissal of CIT's claim for costs incurred to transport and store the trucks after the Leases had terminated.

         A. Breach of Contract and Trespass

         Howard seeks a judgment that CIT breached the Leases and committed a trespass on its property when it failed to remove its trucks from HT's facility after the termination of the Leases. The HT Lease terminated on January 15, 2017. It stated that HT must provide secure storage for the trucks for 90 days after the expiration of the Lease at a location satisfactory to CIT.[9] Accordingly, HT was required to store the trucks only until April 15, 2017. It is undisputed that CIT designated 107 Nehi Street, Ellisville, Mississippi, a property owned by HT, as the delivery location for the trucks subject to the Leases. It is also undisputed that the trucks were returned to that location prior to the termination of the HT Lease. CIT did not, however, take possession of the trucks until November 22 through 30, 2017.[10] Howard therefore argues that it is entitled to damages for breach of contract and trespass for CIT's failure to remove the trucks from its property pursuant to the terms of the HT Lease.

         Under the HDO Lease, there was no requirement that HDO store the trucks after the termination of the Leases. The HDO Lease terminated on September 1, 2017. The trucks that were the subject of the HDO Lease were not picked up from the Delivery Location until February 5 through 8, 2018. Howard therefore argues that it is entitled to damages for breach of contract and trespass for CIT's failure to remove the trucks from its property pursuant to the terms of the HDO Lease.

         CIT does not dispute any of the facts set forth by Howard. However, it presents three arguments against summary judgment on these claims. First, CIT argues that Howard cannot succeed on this claim because it cannot show damages. Specifically, it argues that Howard did not incur any actual costs by storing the trucks at its facility. Howard has not, however, moved for summary judgment on the issue of damages. It asks only for judgment as to its claims for breach of contract and trespass, reserving the issue of damages to trial. CIT has cited to no law suggesting that this is not permissible.[11] Accordingly, this argument fails.

         Next, CIT alleges that the trucks remained at the Delivery Location because Howard breached its obligation to return them in the condition required by the Leases, and thus they were not properly returned. It argues that it was Howard's breach, not its own, that resulted in the continued storage of the trucks on HT's property. In so arguing, CIT persists in the tortured reading of the Leases already rejected by this Court in deciding Howard's first motion for summary judgment.[12] The relevant provision of the Leases states that:

Upon the expiration or termination of the lease term of each item of Equipment . . ., Lessee, at its own expense, will return such item of Equipment to Lessor to such location in the continental United States as Lessor may designate in writing, and in the condition required by this Section 6, and until each such item has been so returned, Lessee shall continue to pay Lessor, on each rent payment date during the Lease term of each such item, the rent for each full rental period for such item as specified in the Individual Leasing Record therefor. Each such item shall be returned in good operating condition with no damage thereto, normal wear and tear excepted, and at a minimum in the condition in which such item is required to be maintained pursuant to Section 6 hereof.[13]

         CIT argues that the phrase “so returned” encompasses the return condition requirements of the Leases, and therefore, the Leases require the trucks to be returned to the proper location and in the proper condition to be “properly returned.” In deciding Howard's prior motion for summary judgment, this Court held that such an interpretation would lead to absurd results.[14] The Court stated that:

Plaintiff [CIT]'s interpretation, in which Defendant [Howard] is liable for lease payments until the trucks are returned in the condition set forth in the Leases, allows Plaintiff to unilaterally extend Defendants' obligation to pay lease payments in perpetuity, pending its determination of the condition of the trucks. Such an interpretation would render the termination dates of the Leases meaningless.[15]

         Here too, CIT's interpretation would allow it to store its trucks on HT's property until it determined in its sole discretion that the trucks met the condition required by the Leases. In case its prior order is unclear, this Court holds that the phrase “so returned” does not incorporate the return condition requirements of the Leases. A more sensible reading is that Howard had two independent obligations under the Leases: (1) to return the trucks at the termination of the Leases to the Delivery Location, and (2) to return the trucks at the termination of the Leases in the condition specified therein. A breach of one obligation has no bearing on the other.

         It is undisputed that Howard returned the trucks to the Delivery Location as required by the Leases and that CIT failed to take possession of them within the time frame required by the Leases. If the trucks were not returned in the required condition, then Howard breached that obligation under the Leases. The condition of the trucks does not, however, have any bearing on whether they were timely returned. Accordingly, Howard's alleged breach is not to blame for CIT's failure to remove the trucks from HT's property. CIT has therefore failed to present any compelling argument against the grant of summary judgment on Howard's breach of contract claim. Howard is entitled to summary judgment that CIT breached its obligation to timely remove the trucks from HT's facility.

         Finally, CIT argues that it cannot be liable for trespass because it did not put the trucks on Howard's property-Howard did. It argues it therefore lacked the requisite intent to have committed the tort of trespass. Relatedly, it argues that it cannot be liable for trespass because Howard consented to store the trucks on its property. Under Louisiana law, a trespass is an act of unlawful physical invasion of the property of another.[16] “[C]ivil trespass is generally considered to be an intentional tort, requiring proof that the defendant took some intentional action that resulted in harm to the plaintiff.”[17]

         Howard argues that CIT clearly had the intent to trespass when it left its trucks on HT's property for months after the Leases terminated. On the other hand, CIT argues that it lacked intent, and Howard consented to store the trucks on its property because Howard had the keys to the trucks, was responsible for parking them at its facility, continued to drive, park, and handle the trucks after the termination of the Leases, and refused to move the trucks to other facilities for testing. Accordingly, there is a material issue of fact as to whether CIT had the requisite intent to trespass or whether Howard ...


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