12-1738-cv (L)

Am. Honda Fin. Corp. v. Simao

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO 

A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS 

GOVERNED BY FEDERAL RULE OF APPELLAT E PROCEDURE 32.1 AND THIS COURT'S 

LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED 

WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN 

ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY 

CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT 

REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals 

for the Second Circuit, held at the Thurgood Marshall United 

States Courthouse, 40 Foley Square, in the City of New York, on 

the 10th day of May, two thousand thirteen.

PRESENT: AMALYA L. KEARSE,

JOHN M. WALKER, JR.,

DENNY CHIN,

Circuit Judges.

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AMERICAN HONDA FINANCE CORPORATION, a 

California Corporation,

Plaintiff-CounterDefendant-Appellee,

12-1738-cv (L)

-v.- 12-1745-cv (CON)

PHILIP J. SIMAO, V.M. PAOLOZZI IMPORTS, 

INC., a New York Corporation, DBA 

DealMaker at Drum Honda, AKA DealMaker 

Honda of Watertown, DEALMAKER OF 

POTSDAM, LLC, a New York Limited 

Liability Company, DBA DealMaker Honda 

of Potsdam,
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Defendants-CounterClaimants-Appellants,

MARK v. PICARAZZI,

Defendant-CounterClaimant *

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FOR PLAINTIFF-COUNTER- JULIAN B. MODESTI (Teresa M.

DEFENDANT-APPELLEE: Bennett, on the brief), Menter, 

Rudin & Trivelpiece, P.C., 

Syracuse, New York.

FOR DEFENDANTS-COUNTER- BRIAN J. BUTLER (Stephen A. 

CLAIMANTS-APPELLANTS: Donato, Stephanie M. Campbell, on 

the brief), Bond, Schoeneck & 

King, PLLC, Syracuse, New York.

Appeal from the United States District Court for the 

Northern District of New York (Suddaby, J.).

UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND 

DECREED that the judgment of the district court is AFFIRMED. 

From April 2007 through April 2008, defendantscounter-claimants-appellants Philip J. Simao and his two Honda 

dealerships, V.M. Paolozzi Imports, Inc. and DealMaker of 

Potsdam, LLC (together, the "Dealerships"), entered into 

inventory financing agreements with plaintiff-counter-defendantappellee American Honda Finance Corporation ("Honda Finance").

Simao personally guarantied these financing arrangements. As 

early as December 2008, the Dealerships failed to make payments 

 

* The Clerk of the Court is directed to amend the caption to 

conform to the above.
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in accordance with the agreements and subsequently failed to 

cure the defaults. Honda Finance sued for breach of contract, 

and defendants asserted various affirmative defenses and 

counterclaims for breach of contract and violations of the 

Automobile Dealers' Day in Court Act ("ADDCA"), 15 U.S.C. § 1221 

et seq. On May 13, 2010, an Order of Seizure was returned 

executed, and Honda Finance gained custody of the Dealerships'

remaining cars. Honda Finance moved for summary judgment on 

December 14, 2010. 

By Memorandum Decision and Order entered March 29, 

2012, the district court (1) granted summary judgment in favor 

of Honda Finance, (2) dismissed all counterclaims, and (3) 

awarded damages in favor of Honda Finance over defendants' 

objection that further discovery was needed. The district court 

entered judgment accordingly on March 29, 2012, and this appeal 

followed. 

We assume the parties' familiarity with the underlying 

facts, the procedural history of the case, and the issues on 

appeal.

A. Denial of Request for Additional Discovery

We review a district court's denial of a request for 

additional discovery for abuse of discretion. Gualandi v. 

Adams, 385 F.3d 236, 244-45 (2d Cir. 2004). A party seeking 
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additional discovery to oppose summary judgment must submit an 

affidavit that demonstrates: "(1) what facts are sought and how 

they are to be obtained, (2) how those facts are reasonably 

expected to create a genuine issue of material fact, (3) what 

effort affiant has made to obtain them, and (4) why the affiant 

was unsuccessful in those efforts." Meloff v. N.Y. Life Ins. 

Co., 51 F.3d 372, 375 (2d Cir. 1995) (internal quotation marks 

omitted); see Fed. R. Civ. P. 56(d). Simao's affidavit, in this 

respect, consists largely of conclusory allegations that 

additional discovery was needed. The only detailed allegations 

are with respect to pre-workout conversations with Honda Finance 

representatives. Although the parties may have approached the 

workout with differing assumptions, for the reasons discussed 

below, those differences are irrelevant. As "the district court 

has broad discretion to limit discovery in a prudential and 

proportionate way," EM Ltd. v. Rep. of Argentina, 695 F.3d 201, 

207 (2d Cir. 2012), we conclude that it did not abuse its 

discretion by denying discovery here. 

B. Summary Judgment

Turning to the merits, we review de novo a decision 

granting summary judgment after construing all the evidence, and 

drawing all reasonable inferences, in favor of the non-moving 

party. Maraschiello v. City of Buffalo Police Dep't, 709 F.3d 
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87, 92 (2d Cir. 2013). After conducting a de novo review, we 

affirm for substantially the reasons outlined by the district 

court in its March 29, 2012 Memorandum-Decision and Order 

granting summary judgment. We add only the following:

First, the parties do not dispute that the Dealerships 

failed to satisfy their payment obligations under the financing 

arrangements. Defendants argue in conclusory fashion that they 

were not in "default," but it is clear that assertion is based 

on its waiver, estoppel, and oral modification defenses. As the 

district court held, in light of the unambiguous provisions in 

the contracts, which defined an event of default to include 

"Failure of Dealer[ship] to make any payment under this 

Agreement . . . when due and payable," these defenses fail as a 

matter of law. While Honda Finance continued to provide credit 

to the Dealerships in 2009 after having declared them to be in 

default and then briefly considered Simao's proposal for a

workout in early 2010, Honda Finance never called off the 

defaults it had declared or waived its right to exercise postdefault remedies. Furthermore, under the non-waiver clauses of 

the financing and term loan agreements, any waiver of default by 

Honda Finance did not also waive future defaults. Since the 

Dealerships could not satisfy their payment obligations, they 

were in default as soon as Honda Finance chose to so declare. 
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And, in light of the notices of default sent by Honda Finance to 

defendants reserving all rights related to the Dealerships' 

defaults, we see nothing approaching a "clear manifestation of 

an intent" to relinquish its right to declare defaults. Beth 

Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., 

Inc., 448 F.3d 573, 585 (2d Cir. 2006) (quotation omitted); see

also Bank of Am., N.A. v. William V. Schmidt Co., Inc., No. 10-

cv-4926, 2011 WL 1334844, at *7 (S.D.N.Y. Mar. 25, 2011) 

(rejecting allegation that lender had waived default where it 

had "consistently asserted its right to the money and repeatedly 

requested that [borrower] make arrangements to resolve the 

situation"). 

Second, once the Dealerships defaulted, Simao became 

liable by operation of the guaranty agreements, and his 

affirmative defenses are unavailing. Although we interpret 

guaranty obligations "in the strictest manner," White Rose Food 

v. Saleh, 99 N.Y.2d 589, 591 (2003), the court must first 

determine "the meaning of the contract of guarantee . . . 

according to the ordinary principles of contract construction," 

Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill 

Lynch, Pierce, Fenner & Smith Inc., 188 F.3d 31, 34 (2d Cir. 

1999) (quotation omitted). Here, the Continuing Personal 

Guaranty signed by Simao on behalf of each dealership waived any 
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available defenses "expressly, unconditionally and irrevocably" 

and "until all indebtedness [would be] paid in full". See

Merrill Lynch, 188 F.3d at 34-36 (discussing, under New York 

law, waivers in guaranty agreements). Likewise, Honda Finance 

never waived its right to enforce the agreement by participating 

in settlement negotiations. Rather, by the express terms of the 

guaranties, its rights were preserved even if it declined to 

promptly exercise them in the hope that it could work things out 

with the Dealerships.

Third, Simao's argument that he only signed the 

guaranties in an official capacity has no merit. Although Simao 

signed certain guaranties as a "member" of the Dealerships, the 

record also establishes that he signed -- in an individual 

capacity -- a "Continuing Personal Guaranty" on behalf of each 

dealership, which guarantied the sums owed to Honda Finance. 

Thus, the fact that he signed other guaranties in a nonindividual capacity is irrelevant; his liability rests on those 

guaranties that were personal to him. See, e.g., Chem. Bank v. 

Haseotes, 13 F.3d 569, 573 (2d Cir. 1994) (per curiam) (noting 

that a creditor may seek summary judgment if, inter alia, it can 

establish "that the defendant made a guarantee of payment of [a] 

debt"). 
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Fourth, even if we assume without deciding that Honda 

Finance was an "automobile manufacturer" under the ADDCA, there 

has been no showing of bad faith.1 Honda Finance provided 

defendants with three notices of default, before making a demand

for immediate payment in full. It agreed to discuss a workout, 

and considered (albeit briefly) a workout proposal, which was

ultimately rejected in favor of filing suit. On this record, 

Honda Finance provided defendants with plenty of notice and 

opportunity to cure the Dealerships' defaults, and we therefore 

conclude that a reasonable jury could have only found that Honda 

Finance did not act in bad faith. Hence, it cannot be liable 

under the ADDCA. See 15 U.S.C. § 1222. 

Finally, defendants contend that the district court's 

damages award did not properly credit them for certain vehicles

allegedly seized by Honda Finance. Counsel conceded during oral 

argument, however, that defendants neither raised the issue of 

missing collateral nor objected to the evidence submitted by 

Honda Finance in support of damages. When a party has failed to 

preserve an argument in a civil action, we will entertain it 

only if the alleged error is "fundamental." Shade v. Housing 

 

1 Under the ADDCA, "[a]n automobile dealer may bring suit against 

any automobile manufacturer . . . by reason of the failure of said automobile 

manufacturer . . . to act in good faith" with respect to a franchise 

agreement. 15 U.S.C. § 1222. For the purpose of the statute, an "automobile 

manufacturer" includes a corporation "which acts for and is under the control 

of [an automobile manufacturer]." Id. § 1221(a). 
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Auth. of New Haven, 251 F.3d 307, 312-13 (2d Cir. 2001). "An 

error is fundamental under this standard only if it is 'so 

serious and flagrant that it goes to the very integrity of the 

[proceedings].'" Id. at 313 (quoting Modave v. Long Island 

Jewish Med. Ctr., 501 F.2d 1065, 1072 (2d Cir. 1974)). Here, 

the record was not sufficiently developed to indicate that any 

difference between the number of vehicles for which a seizure 

order was sought in February 2010 and the number of vehicles for 

which defendants were given credit after the vehicles were 

actually seized in May 2010 was not warranted. Accordingly, we 

conclude that defendants waived this issue below and that the 

interests of justice do not warrant our consideration of it now. 

We have considered defendants' remaining arguments and 

conclude they are without merit. For the foregoing reasons, we 

AFFIRM the judgment of the district court.

FOR THE COURT:

Catherine O'Hagan Wolfe, Clerk