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De Lage Landen Financial Services, Inc. v. Rasa Floors

August 12, 2011

DE LAGE LANDEN FINANCIAL SERVICES, INC.
v.
RASA FLOORS, LP
DE LAGE LANDEN FINANCIAL SERVICES, INC.
v.
VIEWPOINT COMPUTER ANIMATION, INC., ET AL.



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

MEMORANDUM AND ORDER AWARDING PLAINTIFF'S DAMAGES FOR PRINCIPAL AND INTEREST AND RULING ON DEFENDANTS' LIABILITY FOR AND FURTHER PROCEDURES TO DETERMINE AMOUNT OF ATTORNEYS' FEES AND COSTS

In a Memorandum and Order dated June 24, 2011, the Court determined that Plaintiff ("DLL") was entitled to judgment in its favor on its claims against Defendants and third-party Defendant North Central Communications Corp. ("NCC") (collectively "Defendants"), and also that DLL was entitled to judgment in its favor as to Defendants' counterclaims against DLL. The Court directed the parties to discuss the amount of damages owing to DLL and required submissions by each party.

1. DLL'S Damages as to Principal and Interest The Court has now reviewed these submissions and is prepared to make an award of damages in favor of DLL and against Defendants, limited to principal and interest.*fn1 In reviewing the submission of DLL, including the affidavit of Stephen F. Majer, Jr., the Court concludes that the amount of Defendants' liability to DLL for principal and interest can be determined as a matter of law.*fn2

DLL submitted periodic invoices to Defendants pursuant to the contract and there is no dispute that Defendants stopped making payment on those invoices at a certain point of time. Under the contract, DLL is entitled to interest on amounts due but unpaid. DLL set forth the calculations as to the amount of principal and interest due in Majer's initial affidavit. Upon motion of the Defendants to strike the affidavit because it was not clear whether it was made on personal knowledge, the Court entered an Order requiring that DLL submit a supplemental affidavit showing that Majer had personal knowledge of the amounts due and owing. The supplemental affidavit was filed on June 24, 2011 (ECF No. 257). The Court finds that the Majer affidavit accurately sets forth the amounts of principal and interest due in accordance with the contractual terms.

According to the Defendants, DLL may collect only for the portion of the monthly Lease Payments that was allocated to equipment, as opposed to telephone and internet services, and the "the customer service agreements, as incorporated into the lease agreements, contain the allocation of the monthly payments -- all to telephone and interest access services, and nothing to equipment." [Defendants' Damages Submission at 6, 20-21, 37]. Such argument is without merit.

Defendants' argument rests upon their contention that the Pass Through Payment to Capital 4 "is not found in, or supported by, the lease agreement" and, therefore, can be explained only by interpreting the Lease Agreements to incorporate the terms of the POZ Customer Agreements. [Defendants' Damages Submission at 6, 20-21, 37]. However, the Court's July 28, 2011 Memorandum expressly rejected this "single contract" theory, stating:

The Court finds it unnecessary to read the two contracts as one to explain the payments to Capital 4 as DLL's Lease Agreements specified that lease payments could "INCLUDE THE COST OF MAINTENANCE AND/OR SERVICE BEING PROVIDED BY THE SUPPLIER AND/OR MANUFACTURER[.]" Pl's App. Ex. C at § 7. [Summary Judgment Opinion at 26].

Defendants' argument regarding apportionment between equipment and services repeats the affirmative defenses to liability that this Court has already rejected as legally insufficient, e.g., that Capital 4 overvalued the equipment and/or that the Defendants were told that the equipment was "free." As this Court held in its recent Summary Judgment Opinion: "the charges for services ... are not at issue in this case. It is undisputed that DLL eliminated the charges to Defendants for telephone and internet services and the Pass-Thur payments to Capital 4 when Capital 4 ceased to provide telephone and internet services to Defendants." [Summary Judgment Opinion at 31]. The Court finds the undisputed facts establish that the Lease Payments DLL is attempting to collect relate to the amounts DLL actually funded.

Mr. Majer testified, without contradiction, that the Lease Payments were structured to pay back DLL for the amounts actually funded, pursuant to the invoices submitted by Capital 4, together with some profit for DLL. [5/5/10 H.T. at 29 (Majer)]. The "deferred maintenance" payment that was added to the equipment portion of the Lease Payments was passed along to Capital 4 for public access services and was eliminated when Capital 4 stopped providing those services. [Id. At 32]. DLL did not pre-fund, and is not attempting to collect, those deferred maintenance charges.

The Court rejects the Defendants' arguments that DLL's damages should be modified because DLL failed to file a separate notice of intent to accelerate the lease payments upon Defendants' cessation of making those payments. The Court finds that no such notice was necessary in view of Plaintiff's promptly filing this litigation. See Kingsly Compression, Inc. v. Mountain V Oil & Gas, Inc., 2010 WL 4929076 (W.D. Pa. 2010). In any event, the amounts are now due, even if acceleration was improper.

After reviewing the papers, the Court initially found one factual issue relating to an alleged payment by NCC. In its brief, NCC asserts that a payment was made in the amount of $1,728.19, which DLL failed to apply to its account. After Majer asserted, in a supplemental affidavit filed July 25, 2011 (ECF No. 260), that DLL's records do not show that this payment was received by DLL, the Court ascertained a possible issue of fact as to whether this payment was or was not made by NCC. The Court directed NCC to support its assertion with a copy of a cancelled check or a wire confirmation showing that this payment of $1,728.19 was made by NCC and received by NCC. On April 12, 2011, NCC filed a Notice of Compliance with the Court's Order, and an amended Affidavit by an NCC officer that its assertion was made in error and it did not make the alleged payment of $1,728.19.

The Court concludes that Plaintiff has appropriately documented, and Defendants have failed to show any genuine issue of fact concerning the amount due for principal and interest The Court will therefore find that the amounts of principal and interest as calculated by DLL are the appropriate amounts for a money judgment in favor of DLL and against each Defendant, as stated in the attached Order.

2. Final Judgment Under Rule 54(b) is Premature The Court has determined that final judgment pursuant to Rule 54(b), F.R. Civ. P. cannot be entered in a case of this nature until after attorneys fees and costs have been determined. See Ragan v. Tricounty Excavating, Inc., 62 F.3d 501, 505 (3d Cir. 1995) and see F. R. Civ. P. 54(d)(2)(A). When, as in this case, the substantive law requires attorneys fees and costs to be proved as an element of contractual damages, attorneys fees and costs must be awarded prior to any final judgment under Rule 54(b).

3. DLL Is Entitled to All of its Attorneys' Fees and Costs Through June 24, 2011 The Court now having made a decision as to the amount of principal and interest to which DLL is entitled, and the Court having previously granted summary judgment in favor of DLL on the Defendants' counterclaims against DLL, the only remaining issue between DLL and ...


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