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U.S. Bank, N.A. v. Rosenberg

United States District Court, Third Circuit

December 19, 2013

U.S. BANK, NATIONAL ASSOCIATION, Plaintiff/Counterclaim Defendant,
MAURY ROSENBERG, Defendant/Counterclaim Plaintiff.



These cross motions for summary judgment form the latest chapter in the dispute between U.S. Bank, Maury Rosenberg, and their affiliates, a fight that is now nearing the end of its first decade. In brief, U.S. Bank argues that Rosenberg owes it nearly $5, 000, 000 as a result of a personal guaranty he executed, plus interest, attorneys’ fees, and costs. U.S. Bank moves for summary judgment on Rosenberg’s liability under the guaranty. Rosenberg asserts that his liability under the guaranty is far lower than $5, 000, 000 and that, in any event, U.S. Bank cannot collect on the guaranty because it has acted in bad faith in its lawsuits against Rosenberg. Rosenberg has moved for summary judgment on his claims that U.S. Bank has engaged in wrongful use of civil proceedings in violation of the Dragonetti Act[1] and has committed abuse of process. He also moves for summary judgment on U.S. Bank’s assertion that it is entitled to offset any money that Rosenberg wins from his counterclaims against the amount Rosenberg owes under the guaranty. In response to Rosenberg’s motion, U.S. Bank asserts that it is further entitled to summary judgment that it is not liable on Rosenberg’s Dragonetti Act and abuse-of-process claims and in the alternative that Rosenberg has already recovered the damages he seeks on those claims from a jury verdict he won in a Florida case arising from an involuntary bankruptcy petition filed against Rosenberg. For the reasons discussed below, the cross-motions will be denied.

I. Background

In 2000, certain medical imaging companies (collectively, “NMI”) controlled by Maury Rosenberg entered into leases for equipment with predecessors in interest to U.S. Bank, including Lyon Financial Services, Inc. In 2003, Lyon claimed that the lessees had defaulted, and filed suit against them. By July 2004, Lyon had filed no fewer than thirteen lawsuits against the lessees and Rosenberg. These suits were settled in 2005 pursuant to an agreement that provided pursuant to certain Modified Leases that NMI could continue to rent the equipment at a rate of $100, 000 per month.

As part of the settlement agreement, Rosenberg executed a personal guaranty under which he would be liable for up to approximately $7, 600, 000 in the event of a default upon demand from Lyon. This maximum amount was to be reduced by about $127, 000 every month that NMI paid its lease. According to this schedule, Rosenberg would have had no liability to Lyon after 60 months of NMI’s renting the equipment.

The parties agree that NMI paid its rent for twenty-one months, reducing the Guaranteed Amount for which Rosenberg could be liable to about $5, 000, 000. The parties also agree that NMI defaulted after the twenty-first month. The parties disagree, however, over whether Lyon was entitled to demand payment from Rosenberg of the full $5, 000, 000 or whether Lyon was only entitled to its “reasonable costs and expenses” related to administering the leases after the execution of the guaranty.

After NMI failed to make its twenty-second rental payment, another flurry of litigation ensued. Entities related to U.S. Bank filed a confession of judgment in the Court of Common Pleas of Bucks County and an involuntary bankruptcy petition in the Eastern District of Pennsylvania against NMI companies and Rosenberg. Rosenberg moved to strike or open the confession of judgment in Bucks County. Eventually, the confession of judgment in Bucks was stricken as to Rosenberg; U.S. Bank transferred the action to the Court of Common Pleas of Philadelphia; and the action was deferred because of the involuntary bankruptcy proceedings.

On Rosenberg’s motion, the bankruptcy proceeding was transferred to the Southern District of Florida, where he lives. He succeeded in having the proceeding dismissed, and he was adjudged entitled to about $1, 000, 000 in fees from the parties who filed the petition. He also won a jury verdict in the Southern District of Florida for $6, 120, 000 on a claim that the involuntary bankruptcy petition had been filed in bad faith. While the Florida litigation was pending, U.S. Bank filed suit here for breach of the guaranty.

II. Standard of Review

A court will award summary judgment on a claim or part of a claim where there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[2] A fact is “material” if resolving the dispute over the fact “might affect the outcome of the suit under the governing [substantive] law.”[3] A dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[4]

III. Discussion

A. Guaranty Liability

As a threshold matter, the parties dispute whether Pennsylvania’s four-year statute of limitations for contract actions has run in this suit. The court is persuaded that Pennsylvania’s “savings” statute guarantees that this suit is timely.[5] That statute provides, “If a civil action or proceeding is timely commenced and is terminated, a party, or his successor in interest, may, notwithstanding any other provision of this subchapter, commence a new action or proceeding upon the same cause of action within one year after the termination.” The confession of judgment action is a civil action, timely commenced, and this is a new action based on the same cause of action, namely the breach of the guaranty. The only dispute with respect to timeliness is whether the confession of judgment action against Rosenberg was terminated for savings statute purposes. On November 22, 2011, the Court of Common Pleas struck the judgment as to Rosenberg. Rosenberg does not argue to the contrary; rather, he states that because U.S. Bank argues that the confession of judgment proceedings were not terminated for Dragonetti Act purposes (discussed below), they were not terminated for savings statute purposes. Neither party can have it both ways. The confession of judgment action terminated both for Dragonetti Act Purposes and for savings statute purposes on November 22, 2011. This action was filed in February, 2012. Therefore the suit is timely.

On the merits, U.S. Bank argues that Rosenberg has a contractual obligation to pay U.S. Bank about $5, 000, 000 under the Guaranty. Rosenberg guaranteed to Lyon “the full and prompt payment when due, whether by acceleration or otherwise, [of] the sums identified as the ‘Guaranteed Amount’ . . . plus interest . . . and reasonable collection charges.”[6] “Guaranteed Amount” is a defined term, which based on the schedule of payments in the Guaranty equals about $5, 000, 000; Guaranteed Amount plus interest and reasonable collection charges are collectively defined as “Obligations.” The Guaranty continues to state that if an Event of Default occurs under any of the Modified Leases, “the ...

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