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Pro Acoustics, LLP v. Korn

August 24, 2010


The opinion of the court was delivered by: DuBOIS, J.


I. Introduction

Plaintiff Pro Acoustics, LLP ("Pro Acoustics"), initiated this action against defendant Justin Korn on March 10, 2009, alleging that defendant breached an indemnification agreement by seeking contribution from Emery Kertesz, his business partner in General Video Corporation ("GVC"), and Kertesz's wife. Presently before the Court is defendant's Motion for Summary Judgment, filed May 25, 2010. For the reasons stated below, the motion is denied.

II. Background

GVC obtained a line of credit from Lafayette Ambassador Bank in 1997, which was secured by personal guaranty agreements signed by both defendant and the Kerteszes. (Mot. 1-2, ¶ 2-3.) In relation to the personal guaranties, defendant and Kertesz also executed an indemnification agreement in the form of a letter dated November 12, 1998, which provides, "This letter will confirm our understanding that (1) [GVC] will indemnify you for all amount actually paid by you under the Guaranty, and (2) to the extent [GVC] shall fail to so indemnify you, Justin Korn will indemnify you under the Guaranty." (Id. at 2, ¶ 4.) Both Kertesz and defendant signed the letter as officers of GVC, and defendant also signed in his individual capacity. (Id.)

When GVC failed to meet its obligation to Lafayette, the bank sought to enforce the guaranty against defendant and the Kerteszes. (Id.) Ultimately, defendant paid $170,132.36 to the bank; neither Kertesz nor his wife made any payments under their personal guaranty. (Id.) Thereafter, defendant sued the Kerteszes in a separate legal action, seeking contribution based on their status as co-guarantors of GVC's debt. (Id. at 3, ¶ 6.) In that case, Judge Katz granted the Kerteszes' motion for summary judgment on defendant's claim for contribution.*fn1 Korn v. Kertsez, No. 06-5340, slip op. (E.D. Pa. Dec. 20, 2007).

Pro Acoustics, Kertesz's employer, paid the legal fees to the law firm that handled the defense of the case, which amounted to approximately $80,000. (Mot. 4, ¶ 2.) Those are the legal fees Pro Acoustics seeks to recover in this case.

On February 29, 2008, Kertesz and his wife assigned to Pro Acoustics all of Assignor's rights, title and interest, claims and/or causes of action, awards, judgments as they relate to Assignor's claims against Justin Korn arising from Civil Action No. 06-5340 in the United States District Court for the Eastern District of Pennsylvania and the letter of indemnity dated November 12, 1998 executed by Justin Korn, and any and all other agreements by Korn to indemnify Kertesz.

(Id. at 7, ¶ 12.) In November 2009, Kertesz signed a promissory note in the amount of $82,000 in favor of Pro Acoustics, payable in five installments. (Id. at 8, ¶ 16.)

III. Legal Standard

In considering a motion for summary judgment, "the court is required to examine the evidence of record in the light most favorable to the party opposing summary judgment, and resolve all reasonable inferences in that party's favor." Wishkin v. Potter, 476 F.3d 180, 184 (3d Cir. 2007). After this examination, a court should grant summary judgment if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

A factual dispute is material when it "might affect the outcome of the suit under the governing law," and genuine when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). There can be no genuine issue where the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322; see also In re IKON Office Solutions, Inc., 277 F.3d 658, 666 (3d Cir. 2002) ("Only evidence sufficient to convince a reasonable factfinder to find all of the elements of the prima facie case merits consideration beyond the Rule 56 stage." (internal quotation marks omitted)). In order to be sufficient, the evidence "must amount to more than a scintilla, but may amount to less (in the evaluation of the court) than a preponderance." Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001). Where the evidence presented does not meet this threshold, "the plain language of Rule 56© mandates the entry of summary judgment." Celotex, 477 U.S. at 322.

IV. Discussion

In his Motion for Summary Judgment, defendant argues that (1) Kertesz did not suffer a loss, so he has no right to recover under Pennsylvania law; and (2) the indemnification agreement is inapplicable to plaintiff's claim, as the agreement indemnifies Kertesz only for amounts paid to the bank on his personal guaranty. The Court ...

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