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Ford Motor Credit Co. LLC v. Maxwell

United States District Court, M.D. Pennsylvania

August 19, 2014

FORD MOTOR CREDIT CO. LLC, Plaintiff,
v.
PETER J. MAXWELL et al., Defendants,
v.
CHESTER STEWART Third Party Defendant.

MEMORANDUM OPINION

ROBERT D. MARIANI, District Judge.

I. Introduction

Before the Court is Third-Party Defendant Chester Stewart's ("Stewart") Motion for Attorneys' Fees pursuant to 28 U.S.C. § 1927 (Doc. 127). The Motion has been briefed by Stewart and Defendant/Third-Party Plaintiff Thomas and Lori Smith ("Smiths"). Plaintiff Ford Motor Credit ("FMC") and Defendants Peter and Sharon Maxwell ("Maxwells") have not filed briefs. For the reasons that follow, the Court will deny Stewart's Motion.

II. Background

Because the facts of record have been summarized by this Court in three separate memoranda (see Doc. 51 (granting Stewart's Motion to Dismiss the Smiths' Third-Party Complaint); Doc. 90 (granting in part and denying in part Stewart's Motion to Dismiss Defendant Smith's Amended Third-Party Complaint) and Doc. 120 (granting FMC and Stewart's Motions for Summary Judgment); the Court will only outline the facts and procedural history essential to this Memorandum Opinion.

This case arose out of a Complaint flied by FMC alleging a breach of contract claim against the Smith and Maxwell Defendants. (Doc. 1). Smith Defendants filed a Third-Party Complaint (Doc. 24) against Stewart on December 16, 2010 relating to a Stock Sale Agreement between Stewart as seller and the Smith and Maxwell Defendants as buyers. On March 15, 2011, Stewart filed a Motion to Dismiss the Third-Party Complaint (Doc. 46), which Judge Munley granted on July 27, 2011 with leave to amend (Doc. 51).

On August 17, 2011, the Smith Defendants subsequently filed a five-count, Amended Third-Party Cornplaint (Doc. 52) against Stewart, asserting claims of (1) breach of contract, (2) quantum meruit, (3) fraudulent misrepresentation, (4) negligent misrepresentation and (5) respondeat superior. Stewart filed a Motion to Dismiss the Amended Third-Party Complaint on September 16, 2011. (Doc. 57). On November 14, 2011, the case was reassigned to the undersigned.

On May 14, 2012, the Court granted Stewart's Motion in part and denied it in part. (Doc. 91). Specifically, the Court's May 14, 2012 Order dismissed Counts II-V, but allowed the Smiths to proceed with their breach of contact claim (Count I). (ld.). With regard to the Smiths' breach of contract claim, the May 14, 2012 Opinion stated:

Specifically, the Smiths allege that, among others, Stewart violated ¶¶ 4(F), 4(H), 4(N), and 4(0) of the Stock Sale Agreement. ¶ 4(F) warrants that Stewart had good and marketable title to all personal property, free of all encumbrances (including liens and security interests) whatsoever. ¶ 4(H) warrants there are no undisclosed liabilities, except as incurred consistent with past business practice. ¶ 4(N) warrants that Stewart has not made any material omissions or untrue statements of facts, and ¶ 4(0) warrants that all corporate and financial information provided by Stewart to the Smiths is true and accurate.
The Smiths contend that in violation of ¶ 4(N), (0), Stewart did not disclose the existence of the Sales Agreement with FMC. (Doc. 52, ¶ 39). The Smiths i allege Stewart also owed in excess of $266, 000 to FMC for ten cars he had 1. sold before the Stock Sale Agreement was signed (Doc. 52, ¶49-51), but did not disclose these liabilities in violation of ¶ 4(F), (H).

(Doc. 90 at 7-8).

Although the Court noted that "[t]hese provisions conflict with ¶ 5(B), in which the Buyers warrant that Maxwell is fully familiar with [Heritage's] financial condition, assets and liabilities, '" and further warrant that "Smith agrees and acknowledges that he shall be charged with such knowledge as aresult of his relationship to Maxwell, '" the Court concluded,

[T)here is a factual dispute arising from the conflicting provisions of the Stock Sale Agreement. The Smiths claim they were unaware that FMC's approval was required before a transfer of ownership could take place, as stated in the Sales Agreement. They were similarly unaware that there was liability to FMC on ten cars Stewart had previously sold under the Wholesale 1. Agreement. Finally, they claim that Stewart's warranty that he had good title to all the personal property was false because he had granted a security interest in all vehicles to FMC in 1988 under the Security Agreement. Stewart contends that the Smiths should have been aware of all of these arrangements because they represented in the Stock Sale Agreement they had independently reviewed all the books and records of Heritage and they were imputed with knowing everything that Maxwell knew. On a motion to dismiss, the Court presumes all of the facts alleged in the complaint as true. As such, at this time, it is premature to disrniss the breach of contract claim.

(Id. at 8-9). After discovery concluded, FMC (Doc. 101) and Stewart (Doc. 99) filed Summary Judgment Motions. On September 6, 2013, the Court issued an ...


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