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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

ALCO CAPITAL RESOURCE, INC., 

Plaintiff - Appellee, 

v. 

PICTURE IT, INC., a California corporation, 

Defendant, 

and 

RODNEY CATALANO, an individual, 

Defendant - Appellant. 

ORDER 

Entered August 24, 1995 

Before BRORBY, KELLY and HENRY, Circuit Judges. 

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) No. 94-4127 

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This matter comes on for consideration of appellant's 

petition for rehearing. 

Upon consideration whereof, the petition for rehearing is 

granted by substituting the attached amended order and judgment. 

In all other respects, the petition for rehearing is denied. 

Entered for the Court 

PATRICK FISHER, Clerk 

Appellate Case: 94-4127 Document: 01019279638 Date Filed: 07/28/1995 Page: 1 
Patrick Fisher 

Clerk 

UNITED STATES COURT OF APPEALS 

Office of the Clerk 

Byron White United States Courthouse 

1823 Stout Street 

Denver, co 80257 

August 24, 1995 

Elisabeth Shumaker 

Chief Deputy Clerk 

TO: ALL RECIPIENTS OF THE CAPTIONED ORDER AND JUDGMENT 

RE: 94-4127, Alco Capital Resource, Inc. v. Picture It, Inc. 

Filed July 28, 1995, by Judge Kelly 

Please be advised that the court has entered an order 

granting appellants petition for rehearing by substituting 

the attached amended order and judgment. 

Attachment 

Very truly yours, 

Patrick Fisher, 

Clerk 

By:vftct;A,-JYcL~~J Barbara Schermerhorn 

Deputy Clerk 

Appellate Case: 94-4127 Document: 01019279638 Date Filed: 07/28/1995 Page: 2 
FILED , UNITED STATES COURT OF APPEAI.IJDitedStatesCourtofAppcsus Tenth Circuit 

TENTH CIRCUIT 

ALCO CAPITAL RESOURCE, INC., 

Plaintiff-Appellee, 

vs. 

PICTURE IT, INC., a California 

corporation, 

Defendant, 

and 

RODNEY CATALANO, an individual, 

Defendant-Appellant. 

JUL 2 S 1995 

PATRICK FISHER 

Clerk 

No. 94-4127 

(D.C. No. 92-CV-852) 

(D. Utah) 

AMENDED ORDER AND JUDGMENT* 

Before BRORBY, KELLY and HENRY, Circuit Judges. 

Defendant-appellant Rodney Catalano appeals from the district 

court's grant of summary judgment in favor of Plaintiff-appellee 

Alco Capital Resource, Inc. (Alco), and from the district court's 

award of damages and attorneys fees to Alco. Our jurisdiction 

arises pursuant to 28 U.S.C. § 1291, and we affirm in part and 

reverse in part. 

* This order and judgment is not binding precedent, except 

under the doctrines of the law of the case, res judicata, and 

collateral estoppel. The court generally disfavors the citation 

of orders and judgments; nevertheless, an order and judgment may 

be cited under the terms and conditions of the court's General 

Order filed November 29, 1993. 151 F.R.D. 470. 

Appellate Case: 94-4127 Document: 01019279638 Date Filed: 07/28/1995 Page: 3 
Background 

Alco moved for summary judgment in its action seeking to 

collect delinquent lease payments from Mr. Catalano, who had 

personally guaranteed payment on various leases between Alco and 

Picture It, Inc. Mr. Catalano argued that the leases at issue 

were actually security agreements governed by Article 9 of the 

Uniform Commercial Code (UCC), and as such, Alec's damage 

calculations were in error. Disagreeing with Mr. Catalano's 

characterization, the district court ruled that, under applicable 

Georgia law, the lease agreements were not security agreements 

governed by the UCC, and that Alco was entitled to judgment in the 

amount of $42,387.73. 

Discussion 

We review the grant of summary judgment de novo, applying the 

same legal standard utilized by the district court under Fed. R. 

Civ. P. 56(c). James v. Sears. Roebuck & Co., 21 F.3d 989, 997-98 

(lOth Cir. 1994). Summary judgment is appropriate when "there is 

no genuine issue as to any material fact and . the moving 

party is entitled to a judgment as a matter of law." Hagelin for 

President Comm. v. Graves, 25 F.3d 956, 959 (lOth Cir. 1994) 

(quoting Fed. R. Civ. P. 56 {c)), cert. denied, 115 S. Ct. 934 

(1995); see also, Matsushita Elec. Indus. Co .. Ltd. v. Zenith 

Radio Corp., 475 U.S. 574, 585-87 (1986); Celotex Corp. v. 

Catrett, 477 U.S. 317, 323-27 (1986); Anderson v. Liberty Lobby, 

Inc., 477 u.s. 242, 247-50 (1986). "In applying this standard, we 

construe the factual record and reasonable inferences therefrom in 

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the light most favorable to the party opposing summary judgment." 

Blue Circle Cement, Inc. v. Board of County Comm'rs, 27 F.3d 1499, 

1503 (lOth Cir. 1994). 

A. Characterizing the Agreements 

We agree with the district court's conclusion that the 

agreements between Alco and Picture It are in fact leases and not 

security agreements. Georgia law applicable at the time of the 

leases' 1991 execution provided: 

Whether a lease is intended as security is to be 

determined by the facts of each case; however (a) the 

inclusion of an option to purchase does not of itself 

make the lease one intended for security, and (b) an 

agreement that upon compliance with the terms of the 

lease, the lessee shall become or has the option to 

become the owner of the property for no additional 

consideration or for a nominal consideration does not 

make the lease one intended for security. 

Ga. Code Ann. § 11-1-207(37) (1990). It is clear from the 

language of this statute, and from case law interpreting it that, 

while perhaps not determinative, the question of which party owns 

the property is an essential element in distinguishing between a 

lease and a security agreement. See Tri-Continental Leasing Corp. 

v. Charles Beall & Co., 709 F. Supp. 218, 220 (N.D. Ga. 1989); 

Ford v. Rollins Protective Servs. Co., 322 S.E.2d 62, 64 (Ga. Ct. 

App. 1984); In re Atlanta Times. Inc., 259 F. Supp. 820, 827 (N.D. 

Ga. 1966), aff'd, 383 F.2d 606 (5th Cir. 1967). When, as in the 

present case, the lessor continues to own the leased goods, and 

the lessee has no option to acquire ownership, the agreement is a 

lease. Id. 

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The intent of the parties, as evidenced by the language of 

these complete and unambiguous agreements, does not contradict our 

conclusion. See Tri-Continental Leasing, 709 F. Supp. at 220 

(necessary factor in classifying agreement is intent of parties, 

which may be determined from language of unambiguous document) . 

We agree with the district court that the parol evidence rule 

operates to bar the admissision of additional documents suggesting 

that the agreements were in the nature of conditional sales. See 

Chapman v. Avco Financial Serv. Leasing Co., 387 S.E.2d 391, 393 

(Ga. Ct. App. 1989) (lease containing integration clause may not 

be varied by parol evidence); Taylor Freezer Sales Co. v. Hydrick, 

227 S.E.2d 494, 497 (Ga. Ct. App. 1976) (" [p]rior and 

contemporaneous statements and agreements cannot be shown to vary, 

contradict or change the terms of a valid written contract 

purporting on its face to contain all the terms of an agreement 

between [the] parties"). 

B. Damages 

Mr. Catalano next contends that the district court erred by 

awarding $31,290.07 in damages to Alco. He argues that: 

(1) inconsistencies apparent on the face of affidavits 

accompanying Alco's motion should have precluded summary judgment 

on the issue of damages; and {2) the district court failed to 

consider the impact of Alco's alleged duty to mitigate damages. 

Unfortunately, Mr. Catalano has neglected to buttress these 

arguments with sufficient supporting facts. "Rule 56(e) 

requires the nonmoving party to go beyond the pleadings and by 

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[his] own affidavits, or by the 'depositions, answers to 

interrogatories, and admissions on file,' designate 'specific 

facts showing that there is a genuine issue for trial.'" Celotex, 

477 U.S. at 324 (quoting Fed. R. Civ. P. 56(e) (emphasis added)). 

Simply put, Mr. Catalano's assertions by affidavit about the 

shortcomings of Alec's damage calculations do not suffice to 

create a genuine issue as to any material fact. In his affidavit, 

Mr. Catalano contends that (1) a variation exists between the 

proceeds obtained by Alec on resale versus release of the copiers; 

and (2) that, if given prior notice of the proposed resales or 

releases, Mr. Catalano would have taken steps to help prevent Alec 

from realizing deficiencies. Although we view the evidence in a 

light most favorable to the nonmovant, it is not enough that the 

nonmovant's evidence be "merely colorable" or anything short of 

"significantly probative." Anderson, 477 U.S. at 249-50. See 

also Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 

574, 587 (1986) ("Where the record taken as a whole could not lead 

a rational trier of fact to find for the nonmoving party, there is 

'no genuine issue for trial.'") (citing First Nat'l Bank v. Cities 

Serv. Co., 391 U.S. 253, 289 (1968)). Alec was not required to 

provide evidence negating the assertions in Mr. Catalano's 

affidavit. See Celotex, 477 U.S. at 323. Summary judgment on the 

issue of damages was entirely appropriate. 

C. Attorney's Fees 

Mr. Catalano challenges the $11,097.66 in attorney's fees 

awarded to Alec by the district court on two separate legal 

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grounds. First, Mr. Catalano contends that the lease agreements 

did not authorize Alco to seek attorney's fees from him as a 

guarantor. Second, Mr. Catalano argues, that even if he were 

liable for such fees, Alco has failed to comply with the notice 

provisions of Ga. Code Ann. § 13-1-11(a) (3), and so is barred from 

recovery. Because we find the second argument dispositive, we 

need not address the first. 

The district court held that because Ga. Code Ann. § 13-1-

11(a) (3) was 11 merely a procedural prerequisite to obtaining a fee 

award in Georgia, 11 Alec's admitted noncompliance with this 

provision did not preclude awarding it attorney's fees in a 

federal action. We disagree both with the district court's 

characterization of § 13-1-11(a) (3), and with its ultimate 

conclusion regarding Alec's ability to recover such fees. 

Both the statutory framework and relevant case law indicate 

that § 13-1-11(a) (3) is a necessary and indivisible part of § 13-

1-11, a state statute that creates a substantive obligation to pay 

attorney's fees upon notes or other forms of debt, when collected 

by or through an attorney after the debt has matured. See Ga. 

Code Ann. § 13-1-11(a). Three subsections set forth various 

conditions on this obligation, such as the amount of fees 

recoverable, (a) (1) and (a) (2), and the requirement that the 

holder of the obligation provide the debtor notice in order to 

give the latter the opportunity to cure the debt and avoid having 

to pay the debtholder's attorney's fees, (a) (3). See United 

States v. Allen, 699 F.2d 1117, 1119-20 (11th Cir. 1983). Other 

federal courts, when faced with cases governed by Georgia law, 

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have treated these conditions as mandatory and part of the 

substantive obligation itself, and so have included them in their 

consideration of whether attorney's fees are recoverable under § 

13-1-11(a). See, e.g., Pacific Mut. Life Ins. Co. v. Wise, 878 

F.2d 1398, 1399-1400 (11th Cir. 1989) (examining amount of fees); 

Allen, 699 F.2d at 1119-20; In re East Side Investors, 7 B.R. 515, 

517 (N.D. Ga. 1980) (liability for attorney's fees contingent upon 

full compliance with conditions of § 13-1-11's predecessor 

provision), aff'd, 694 F.2d 242, 244 (11th Cir. 1982). 

Accordingly, we shall do the same. 

In his opposition to summary judgment, Mr. Catalano argued 

that Alco failed to comply with the notice requirements of § 13-1-

11(a) (3). The burden of proving compliance with (a) (3) rests with 

the party seeking attorney's fees. See Walton v. Johnson, 97 

S.E.2d 310, 312-13 (Ga. 1957); Union Commerce Leasing Corp. v. 

Beef 'N Burgundy, Inc., 270 S.E.2d 696, 699-700 (Ga. Ct. App. 

1980); Citizens & S. Nat'l Bank v. Bougas, 256 S.E.2d 37, 41 (Ga. 

Ct. App. 1979), rev'd in part on other grounds, 265 S.E.2d 562 

(Ga. 1980). Nothing indicates that Alco provided such notice. 

Alco having failed to show otherwise, we conclude that it failed 

to comply with the requirements of (a) (3), and thus Alco may not 

recover attorney's fees. See Walton, 97 S.E.2d at 313 (when 

plaintiff fails to give proper notice, recovery of attorney's fees 

is unauthorized) . On remand, the district court shall vacate the 

award of attorney's fees. 

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AFFIRMED in part; REVERSED in part, and REMANDED. 

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Entered for the Court 

Paul J. Kelly, Jr. 

Circuit Judge 

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