Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-4_13-cv-00477/USCOURTS-alnd-4_13-cv-00477-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

NORTHEASTERN DIVISION

WELLS FARGO BANK,

NATIONAL ASSOCIATION,

Plaintiff,

v.

DONALD L. WITT,

Defendant.

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Case No.: 4:13-CV-477-VEH

 

MEMORANDUM OPINION AND ORDER

Procedural Background

Plaintiff Wells Fargo Bank, National Association (“Wells Fargo”) filed this

contract dispute against Defendant Donald L. Witt (“Mr. Witt”) on March 11, 2013.

(Doc. 1). The lawsuit is in federal court on the basis of diversity jurisdiction (id. ¶

1

3) and was reassigned to the undersigned on March 19, 2013. (Doc. 9). 

In its complaint, Wells Fargo alleges a solitary claim for breach of guaranty

against Mr. Witt, as the guarantor of a loan agreement executed on September 27,

2001, between Wells Fargo, and its borrower, Alabama Cylinder Head, LLC

(“ACH”). (Doc. 1 ¶¶ 2, 5, 7, 14-17). The pleading demands judgment against Mr.

 The page references to Doc. 1 correspond with the court’s CM/ECF numbering system. 1

FILED

 2014 Apr-08 PM 03:35

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 1 of 12
Witt:

[I]n an amount not lessthan $1,081,057.05, together with and including,

without limitation, interest accruing at the default rate pursuant to the

terms of the Note, and all attorneys’ fees and court costs incurred by

Wells Fargo in enforcing its rights under [the] Note and Guaranty

Agreement, and all other legal and equitable relief the court deems

proper and just. 

(Doc. 1 at 4). Neither side has requested a jury trial.

Pending before the court is Wells Fargo’s Motion for Summary Judgment

(Doc. 18) (the “Motion”) and supporting brief (Doc. 19), both of which were filed on

December 5, 2013. The Motion seeks an entry of judgment “against Mr. Witt in an

amount not less than $1,142,719.85, plus additional interest and all such other,

further, and different relief as this Court deems just and proper.” (Doc. 18 at 1-2). 

Mr. Witt opposed the Motion (Doc. 22) on January 10, 2014. Wells Fargo

followed with its reply (Doc. 23) and also filed a Motion To Strike Affidavit of

[Donald] Witt (Doc. 24) (the “Strike Motion”) on January 23, 2014. On February 7, 2

2014, Mr. Witt opposed the Strike Motion (Doc. 25) and Wells Fargo replied. (Doc.

26). For the reasons set forth below, the Motion is GRANTED as to liability and the

Strike Motion is TERMED as MOOT.

 Wells Fargo’s Strike Motion actually seeks to strike “certain portions of the Affidavit of 2

Donald L. Witt” (Doc. 24 at 1; see also Doc. 22-4 (attaching affidavit of Mr. Witt)), not the affidavit

of Mr. Witt’s son named “Marty Witt,” as incorrectly suggested in the Strike Motion’s title.

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 2 of 12
Standards

Summary Judgment

Summary judgment is proper only when there is no genuine issue of material

fact and the moving party is entitled to judgment as a matter of law. Fed. R . Civ. P.

56(c). All reasonable doubts about the facts and all justifiable inferences are resolved

in favor of the nonmovant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th

Cir. 1993). A dispute is genuine “if 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). “Once the moving party has properly supported its motion for

summary judgment, the burden shifts to the nonmoving party to ‘come forward with

specific facts showing that there is a genuine issue for trial.’” International Stamp

Art, Inc. v. U.S. Postal Service, 456 F.3d 1270, 1274 (11th Cir. 2006) (citing

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)).

Finally “[i]f the movant bears the burden of proof on an issue, because, as a

defendant, it is asserting an affirmative defense, it must establish that there is no

genuine issue of materialfact asto any element of that defense.” International Stamp,

456 F.3d at 1274 (citing Martin v. Alamo Community College Dist., 353 F.3d 409,

412 (5th Cir. 2003)). 

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 3 of 12
Evidentiary Rulings

“All evidentiary decisions are reviewed under an abuse-of-discretion

standard.” See, e.g., General Elec. Co. v. Joiner, 522 U.S. 136, 141 (1997). “An

abuse of discretion can occur where the district court applies the wrong law, follows

the wrong procedure, bases its decision on clearly erroneous facts, or commits a clear

error in judgment.” United States v. Estelan, 156 F. App’x 185, 196 (11th Cir. 2005)

(citing United States v. Brown, 415 F.3d 1257, 1266 (11th Cir. 2005)).

Moreover, as the Eleventh Circuit has made clear, not every incorrect

evidentiary ruling constitutes reversible error:

Auto-Owners’ second argument is that it is entitled to a new trial

on the basis of what it describes as a number of erroneous evidentiary

rulings by the district court. Evidentiary rulings are also reviewed under

an abuse of discretion standard. Finch v. City of Vernon, 877 F.2d 1497,

1504 (11th Cir. 1989). Moreover, even if Auto-Owners can show that

certain errors were committed, the errorsmust have affected “substantial

rights” in order to provide the basis for a new trial. See Fed. R. Evid.

103(a). “Error in the admission or exclusion of evidence is harmless if

it does not affect the substantial rights of the parties.” Perry, 734 F.2d

at 1446. See also Allstate Insurance Co. v. James, 845 F.2d 315, 319

(11th Cir. 1988).

Haygood v. Auto-Owners Ins. Co., 995 F.2d 1512, 1515 (11th Cir. 1993). Therefore,

even the existence of many evidentiary errors does not guarantee an appealing party 

relief from an adverse final judgment. Instead, such erroneous rulings by a district

court must “affect the substantial rights of the parties” in order for reversible error to

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 4 of 12
occur. 

Factual Background3

On or about September 21, 2007, Wachovia SBA Lending, Inc. made a loan

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to ACL (“Borrower”), in the amount of $2,000,000.00 (the “Loan”) as evidenced by

that certain Promissory Note dated September 21, 2007, made by Borrower payable

to Wells Fargo in the stated principal amount of $2,000,000.00 (as assumed,

amended, and modified fromtime to time, the “Note”). AF No. 1. The Loan isfurther 5

Keeping in mind that, when deciding a motion for summary judgment, the court must view 3

the evidence and all factual inferences in the light most favorable to the party opposing the motion,

the court provides the following statement of facts. See Optimum Techs., Inc. v. Henkel Consumer

Adhesives, Inc., 496 F.3d 1231, 1241 (11th Cir. 2007) (observing that, in connection with summary

judgment, a court must review all facts and inferences in a light most favorable to the non-moving

party). This statement does not represent actual findings of fact. See In re Celotex Corp., 487 F.3d

1320, 1328 (11th Cir. 2007). Instead, the court has provided this statement simply to place the

court’s legal analysis in the context of this particular case or controversy. 

According to the complaint (and undisputed by Mr. Witt), Wells Fargo is the “successor- 4

by-merger to Wachovia Bank, National Association and Wachovia SBA Lending, Inc.” (Doc. 1 at

1).

The designation “AF” stands for admitted fact and indicates a fact offered by Wells Fargo

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that Mr. Witt has admitted in his written submissions on summary judgment, in his sworn testimony,

or by virtue of any other evidence offered in support of his case. Under appendix II of the court's

uniform initial order (Doc. 10) entered on March 20, 2013, “[a]ll statements of fact must be

supported by specific reference to evidentiary submissions.” (Id. at 16). For Mr. Witt, more

specifically, this means that “[a]ny statements of fact that are disputed by the non-moving partymust

be followed bya specific reference to those portions of the evidentiary record upon which the dispute

is based.” (Id. at 17). Consequently, whenever Mr. Witt has inadequately asserted a dispute over a

fact that Wells Fargo has otherwise substantiated with an evidentiary citation, the court has reviewed

the cited evidence and, if it in fact fairly supports Wells Fargo’s factual assertion, has accepted Wells

Fargo’s fact. On the other hand, whenever Mr. Witt has adequately disputed a fact offered by Wells

Fargo, the court has reviewed the evidence cited by Mr. Witt and, if it in fact fairly supports Mr. 

Witt’s factual assertion, has accepted Mr. Witt’s version. The court’s numbering of admitted facts

(e.g., AF No. 1) corresponds to the numbering of Wells Fargo’s statement of undisputed material

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 5 of 12
evidenced and secured by that certain Loan Agreement dated September 21, 2007,

executed by Borrower in favor of Lender (as assumed, amended, and/or modified

from time to time, the “Loan Agreement”) in Alabama. AF No. 2.

In connection with and as an inducement to Wells Fargo’s making of the Loan

to Borrower, Mr. Witt executed that certain “Unconditional Guarantee” dated

September 21, 2007, in favor of Wells Fargo (as assumed, amended, and modified

from time to time, the “Guaranty Agreement”). AF No. 3. Pursuant to the Guaranty

Agreement, Mr. Witt guaranteed the payment and performance of all of Borrower’s

obligations under the Loan. AF No. 4.1. More specifically, the Guaranty Agreement

(formed in Alabama) provides:

Guarantor unconditionally guarantees payment to Lender of all amounts

owing under the Note. This Guarantee remains in effect until the Note

is paid in full. Guarantor must pay all amounts due under the Note when

Lender makes written demand upon Guarantor. Lender is not required

to seek payment from any other source before demanding payment from

Guarantor.

AF No. 4.2.

On or before August 9, 2012, events of default had occurred and were

continuing to occur under the Loan Documents (the “Events of Default”), including

facts as set forth in Doc. 19 and responded to by Mr. Witt in Doc. 22. A number following a decimal

point corresponds to the particular sentence within the numbered statement of facts. For example,

(AF No. 4.2) would indicate the second sentence of paragraph 4 of Wells Fargo’s statement of facts

is the subject of the court’s citation to the record. 

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 6 of 12
but not limited to Borrower failing to make payments as required under the Loan

Documents. AF No. 5. As a result of the Events of Default, Wells Fargo demanded

repayment of the Note in full pursuant to a Notice of Default and Demand Letter

dated August 9, 2012. AF No. 6. 

As a result of Borrower’s failure to cure its defaults and pay the outstanding

indebtedness due under the Note, Wells Fargo sent another Notice of Default and

Acceleration and Demand for Payment by letter dated October 12, 2012. AF No. 7.

The recipients of this certified letter included Mr. Witt. (Doc. 1 at 18).

Neither Borrower nor Mr. Witt complied with or responded to the default

letters and, as of November 15, 2013, the outstanding indebtedness due under the

Note was $1,142,719.85, consisting of $989,123.57 in outstanding and unpaid

principal, $143,168.49 in accrued and unpaid interest, and $10,352.79 in late fees. AF

No. 8. Interest accrues on the unpaid principal of the Note at the per diem rate of

$261.02 per day. AF No. 9.

Discussion

Wells Fargo contends that it is entitled to summary judgment on the Guaranty

Agreement executed by Mr. Witt. Alabama law provides that “[e]very suit on a

guaranty agreement requires proof of the existence of the guaranty contract, default

on the underlying contract by the debtor, and nonpayment of the amount due fromthe

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 7 of 12
guarantor under the terms of the guaranty.” Sharer v. Bend Millworks Systems, Inc.,

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600 So. 2d 223, 225-26 (Ala. 1992) (internal quotation marks omitted)(quoting Delro

Indus., Inc. v. Evans, 514 So. 2d 976, 979 (Ala. 1987)). Wells Fargo maintains that

all three contractual elements are met in this case because the record affirmatively

establishes that(i) Mr. Witt entered into the Guaranty Agreement for the indebtedness

of ACH; (ii) ACH defaulted on the underlying Note; and (iii) Mr. Witt received

notice of ACH’s default and has refused to pay in accordance with the terms of the

Guaranty Agreement.

Under Alabama law, “the rules governing the interpretation and construction

of contracts are applicable in resolving a question as to the interpretation or

construction of a guaranty contract.” Colonial Bank of Ala. v. Coker, 482 So. 2d 286,

291 (Ala. 1985) (citing 38 Am. Jur. 2d Guaranty § 70 (1968)). “[W]hen the terms of

a contract are unambiguous, the contract's construction and legal effect become a

question of law for the court, and when appropriate may be decided by summary

The parties are correct that Alabama law substantively applies in this instance because: 6

(1) “[A] federal court in a diversity case is required to apply the laws, including principles of conflict

of laws, of the state in which the federal court sits.” Manuel v. Convergys Corp., 430 F.3d 1132,

1139 (11th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)), and

(2) in the absence of any contractual provision specifying which law governs such as is the situation

here, “Alabama follows the principle . . . that a contract is governed by the laws of the state where

it [e.g., the Guaranty Agreement] is made [e.g., Alabama] . . . .” Cherry, Bekaert & Holland v.

Brown, 582 So. 2d 502, 506 (Ala. 1991).

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judgment.” Colonial Bank, 482 So. 2d at 291 (citing Jehle-Slauson Construction Co.

v. Hood-Rich, Architects and Consulting Engineers, 435 So. 2d 716, 720 (Ala.

1983)).

Here, Mr. Witt does not maintain that the Guaranty Agreement is ambiguously

worded. Mr. Witt also do not dispute that he entered into the Guaranty Agreement or

that ACH defaulted on its loan agreement with Wells Fargo. Lastly, Mr. Witt does not

contest that he has failed to make payments to Wells Fargo as required by the terms

of the Guaranty Agreement, despite receiving notice of ACH’s default. Thus, Mr.

Witt has failed to offer any evidence that tends to show the existence of a material

fact question on the issue of whether he is liable to Wells Fargo under the terms of

the Guaranty Agreement.

Instead, the only objections offered by Mr. Witt in response to summary

judgment are that “proper notice concerning disposition of collateral was not

provided and that the terms of the short sale were not commercially reasonable.”

(Doc. 22 at 1, 7-10). Wells Fargo counters that Mr. Witt’s “arguments might have

merit and relevance if they were not based on the same false premise: that Wells

Fargo disposed of the collateral.” (Doc. 23 at 2). 

Because the sale was a voluntary one made by ACH, Wells Fargo is correct that

Mr. Witt’s legal challenges premised upon certain protections afforded under Article

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 9 of 12
9 of the Alabama Commercial Code are simply inapplicable. More specifically,

Article 9's notice requirement is triggered only when a secured party disposes of

collateral and provides:

(b) Notification of disposition required. Except as otherwise provided

in subsection (d), a secured party that disposes of collateral under

Section 7-9A-610 shall send to the persons specified in subsection (c)

a reasonable authenticated notification of disposition.

Ala. Code § 7-9A-611(b) (emphasis by underlining added).

Similarly, the voluntariness of the sale by ACH means that the transaction

occurred outside of the foreclosure process and neither Ala. Code § 7-9A-610(b)

(regarding commercial reasonableness of disposition by secured party) nor the

foreclosure cases cited by Mr. Witt are appropriate authorities for this court to follow

under the short sale circumstances presented by this case. In sum, Mr. Witt’s Article

9 challenges to the enforcement of the Guaranty Agreement against him miss the

mark and he is without any other formulated arguments in opposition to the Motion.

See Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995)

(“[T]he onus is upon the parties to formulate arguments . . . .” (citing Road Sprinkler

Fitters Local Union No. 669 v. Indep. Sprinkler Corp., 10 F.3d 1563, 1568 (11th

Cir.1994))).

For these reasons, Wells Fargo’s Motion is GRANTED as to liability only.

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 10 of 12
Accordingly, Wells Fargo is entitled to recover from Mr. Witt the outstanding

principal, interest, and other fees, as set forth under the terms of the Guaranty

Agreement, which calculations, previously provided to the court as of November 15,

2013, are to be supplemented by Wells Fargo and filed in the form of a proposed

order of final judgment, no later than April 15, 2014, with a copy submitted via

chambers email at hopkins_chambers@alnd.uscourts.gov. 

Any objections to such calculations are due 14 days after the proposed order

of final judgment is filed. At the end of such 14 day period, the proposed order will

be under submission.

Conclusion

For the reasons stated herein, Wells Fargo’s Motion is GRANTED as to

liability only. The court defers issuing a separate order of final judgment in favor of

Wells Fargo and against Mr. Witt pending the proposed order submission and

objection process outlined above. Finally, because the court concludes that Wells

Fargo is entitled to summary judgment with or without consideration of the

challenged portions of Mr. Witt’s affidavit, the Strike Motion is TERMED as

MOOT.

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Case 4:13-cv-00477-VEH Document 27 Filed 04/08/14 Page 11 of 12
DONE and ORDERED this the 8th day of April, 2014.

 

 VIRGINIA EMERSON HOPKINS

United States District Judge

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