Court Opinion

ID: 170364
Source: CourtListenerOpinion
Date Created: 2010-08-14 18:06:45+00
Date Added: 2024-06-11T17:25:06.982268
License: Public Domain

FILED
                                                             United States Court of Appeals
                                                                     Tenth Circuit

                                                                  February 28, 2008
                     UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
                                                                     Clerk of Court
                            FOR THE TENTH CIRCUIT

    JEFFREY J. WEISS,

                Third-Party-
                Plaintiff-Appellee,

          and                                          No. 07-1097
                                            (D.C. No. 05-cv-01834-MEH-PAC)
    VERNAL PROPERTIES, LLC,                             (D. Colo.)
    a Colorado limited liability company,

                Third-Party-Plaintiff,

    v.

    DAVID HIRSCH,

                Third-Party-
                Defendant-Appellant.

                             ORDER AND JUDGMENT *

Before TACHA, EBEL, and MURPHY, Circuit Judges.

*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
      David Hirsch appeals from the district court’s order granting summary

judgment in favor of Jeffrey J. Weiss. We have jurisdiction over this diversity

case under 28 U.S.C. § 1291, and we affirm.

                                  I. Background

      This case began when Patricia Tarasiewicz brought a claim against

Mr. Weiss and his company, Vernal Properties, LLC, for breach of contract based

on a loan agreement. 1 Under that agreement, Ms. Tarasiewicz loaned Mr. Weiss,

Vernal Properties, and Mr. Hirsch (“the Borrowers”) $250,000 to provide capital

for a real estate development project in Stuttgart, Germany. Ms. Tarasiewicz did

not file suit against Mr. Hirsch, but Mr. Weiss filed a third-party complaint

against him for contribution. Because the Borrowers failed to repay the loan

without a legally valid excuse, the district court granted judgment in favor of

Ms. Tarasiewicz. To satisfy the judgment, Mr. Weiss paid the full amount of the

obligation to Ms. Tarasiewicz. Mr. Weiss then moved for summary judgment on

his contribution claim against Mr. Hirsch to recover one-third of the obligation

that he had paid to Ms. Tarasiewicz. After deducting $16,814.52 from the amount

paid by Mr. Weiss, the district court granted summary judgment in Mr. Weiss’

favor and ordered Mr. Hirsch to pay his one-third share of the obligation.

Mr. Hirsch appeals from that order.

1
      The district court’s jurisdiction was based on diversity of citizenship under
28 U.S.C. § 1332.

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                              II. Standard of Review

      We review de novo the district court’s grant of summary judgment,

applying the same standard as the district court. Simms v. Okla. ex rel. Dep’t of

Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999).

Summary judgment is appropriate when there is no genuine issue of material fact

and the moving party is entitled to judgment as a matter of law. Id. In

considering a motion for summary judgment, the evidence must be viewed in the

light most favorable to the party opposing the motion. Id.

                                  III. Discussion

      In his motion for summary judgment, Mr. Weiss asserted that he was

entitled to recover from Mr. Hirsch, his co-obligor on the loan agreement,

one-third of the amount that he paid to Ms. Tarasiewicz to discharge their joint

debt under the loan agreement. Under New York law 2, where there are joint

obligors and one obligor pays more than his proportionate share of the joint debt,

that obligor generally is entitled to obtain payment from his co-obligor for his

equal share of the joint debt. See Boccia v. Murphy, 770 N.Y.S.2d 592, 595 (N.Y.

Sup. Ct. 2003). In response to the summary judgment motion, Mr. Hirsch

2
       Because the loan agreement states that it is to be construed and enforced in
accordance with the laws of the state of New York, Mr. Hirsch argued before the
district court that New York law applied to this dispute. Mr. Weiss did not
challenge this assertion in the district court. See Aplt. App. at 104, 117 n.1.
Accordingly, the district court applied New York law. Id. at 117 n.1.

                                         -3-
admitted that he was a co-obligor under the contract, and he did not contest the

allegation that Mr. Weiss paid the entire obligation.

      Mr. Hirsch agreed that, as a co-obligor on the contract, he would normally

be responsible for one-third of the obligation, but he argued that he should be

excused from paying his one-third share based on the principle set forth in Leo v.

Levi, 304 A.D.2d 621 (N.Y. App. Div. 2003). In that case, the court noted that

“[a]lthough a guarantor who has paid more than his or her proportionate share of

a common liability is entitled to contribution from any co-guarantors, where there

is an inequality of benefits as between co-obligors, it may destroy the equality of

contribution among them.” Id. at 623 (citations omitted). In the Leo case, the

court concluded that summary judgment was inappropriate because there was an

issue of fact as to whether the parties received unequal benefits from the proceeds

of the loan. Id. Mr. Hirsch asserted that, as in the Leo case, Mr. Weiss was not

entitled to summary judgment because there was a factual dispute as to whether

Mr. Weiss benefitted unequally from the loan funds, thereby reducing the amount

he could seek from Mr. Hirsch in contribution. The district court disagreed,

concluding that Mr. Weiss had established his entitlement to summary judgment

for one-third of the amount of the total debt, less $16,814.52 for expenses

incurred by Mr. Weiss prior to the execution of the loan agreement.

      On appeal, Mr. Hirsch argues that the district court erred in granting

summary judgment in favor of Mr. Weiss. He contends that Mr. Weiss received

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an unequal share of the loan proceeds because Mr. Weiss used some of the loan

proceeds for his personal benefit. Mr. Weiss counters that Mr. Hirsch failed to

come forward with any specific evidence that Mr. Weiss personally benefitted

from the loan proceeds, and, therefore, the district court properly granted

summary judgment in his favor.

      A. Prior Expenses

      Mr. Weiss and Vernal Properties were responsible for receiving and

disbursing the loan proceeds for the real estate development project in Stuttgart,

Germany. Mr. Weiss prepared an itemized accounting of the receipt and

disbursement of the funds for the project. That accounting reflects that Mr. Weiss

used loan proceeds to reimburse himself for $16,814.52 of expenses that he

incurred between September and December 2004. Mr. Hirsch argues that

Mr. Weiss personally received a benefit from these loan funds because these

expenses were incurred prior to December 15, 2004, the date they entered into the

loan agreement. In support of his argument, Mr. Hirsch points to language in the

loan agreement, which states that the Borrowers “need additional operating

capital.” Aplt Br. at 12 (quoting Aplt. App. at 88). He argues that the plain

meaning of “additional” in this context is to cover “future” expenses, and that this

was his understanding when he entered into the loan agreement. The district

court concluded that “[t]he simple and unambiguous meaning of the Loan

Agreement is that [the Borrowers] were adding to the money they needed to do

                                         -5-
the project, i.e., they needed more money to do the project. It has no reference to

the date any particular project obligation was incurred.” Aplt. App. at 114.

Moreover, in order to defeat summary judgment, Mr. Hirsch needed to provide

evidence that these previously incurred expenses were not project expenses, but

were for Mr. Weiss’ personal benefit. Mr. Hirsch has provided no evidence of

this. The simple fact that Mr. Weiss incurred expenses prior to the execution of

the loan agreement does not give rise to an inference that those expenses were for

his personal benefit.

      In an attempt to further support his argument that these previously incurred

expenses were for Mr. Weiss’ personal benefit, Mr. Hirsch contends that

Mr. Weiss failed to get authorization from the lender’s representative for these

expenses as contemplated by the loan agreement. Again, any alleged failure by

Mr. Weiss to get authorization for these expenses does not give rise to an

inference that these funds were therefore used for his personal benefit. According

to Mr. Hirsch’s affidavit, Mr. Weiss did not get authorization for “any” of the

disbursements of the loan proceeds, see Aplt. App. at 101 ¶10, yet Mr. Hirsch did

not argue that all of the loan proceeds were disbursed for Mr. Weiss’ personal

benefit. Mr. Hirsch has not provided evidence as to how any alleged failure to

get authorization for these previously incurred expenses establishes that they were

used for Mr. Weiss’ benefit. Finally, it is not clear why Mr. Hirsch is even

complaining about this issue on appeal because the district court deducted these

                                         -6-
prior expenses, which totaled $16,814.52, from Mr. Hirsch’s one-third share of

the debt.

      B. Travel Expenses

      Next, Mr. Hirsch argues that Mr. Weiss personally received a benefit from

loan funds by improperly paying for travel expenses he incurred. Mr. Hirsch

argues that the fact that Mr. Weiss did not get authorization for these expenses

creates a reasonable inference that these expenses would not have been approved

had they been submitted to the lender’s representative. This is not a reasonable

inference. Again, Mr. Hirsch stated in his affidavit that Mr. Weiss did not receive

authorization for any disbursement of the loan funds, yet he does not argue that

all of the loan funds were used for Mr. Weiss’ personal benefit. Accordingly, the

lack of authorization from the lender’s representative for disbursement of the

travel expenses does not establish that the travel was for Mr. Weiss’ personal

benefit.

      Mr. Hirsch also makes the conclusory assertion that it may be reasonably

inferred that these expenses were not proper “operating expenses” under the loan

agreement and that therefore Mr. Weiss used the funds for his own benefit. The

bulk of the travel expenses at issue involved airfare, hotels and meals in Stuttgart,

Germany, where the development project was located. As the district court

explained in its order, “[u]nder the Loan Agreement, the proceeds were explicitly

to be used for, among other things, ‘all due diligence investigations’ and

                                         -7-
‘obtaining all governmental approvals and permits’ for a project that was in

Suttgart, Germany.” Aplt. App. at 115. The district court noted that both

Mr. Weiss and Mr. Hirsch were residents of the United States, and concluded that

there was no material factual dispute about whether some travel was necessary for

this project. Moreover, the district court pointed out that Mr. Hirsch was relying

on equity in advancing his defense of the contribution action, and that Mr. Weiss

had provided evidence that the loan proceeds were used to reimburse Mr. Hirsch

for thousands of dollars of travel as well.

      Finally, Mr. Hirsch argues that Mr. Weiss was not entitled to summary

judgment because Mr. Hirsch stated in his affidavit that “some of the borrowed

funds were misspent, dissipated and spent outside of the manner intended under

the Loan Agreement.” Aplt. Br. at 15. Because Mr. Hirsch did not set forth any

facts to support this statement, this portion of his affidavit may not be used to

defeat summary judgment. See Harvey Barnett, Inc. v. Shidler, 338 F.3d 1125,

1136 (10th Cir. 2003) (“Conclusory allegations that are unsubstantiated do not

create an issue of fact and are insufficient to oppose summary judgment.”

(quotation omitted)).

                                          -8-
      C. Improper Weighing of Evidence and Determination of Amount Due

      Mr. Hirsch argues that the district court should have denied summary

judgment, but instead decided an issue of fact. Mr. Hirsch is again complaining

about the district court’s decision to deduct $16,814.52 of Mr. Weiss’

previously-incurred expenses from Mr. Hirsch’s one-third obligation on the debt.

Because Mr. Hirsch benefitted from the district court’s decision on this issue, it is

unclear why Mr. Hirsch is complaining about it on appeal. Moreover, although

the district court concluded that these prior-incurred expenses represented a

factual dispute, the dispute surrounding these expenses was not material to the

question of whether Mr. Weiss benefitted unequally from the loan proceeds.

Because any factual dispute regarding these expenses did not present a “genuine

issue as to any material fact,” summary judgment in favor of Mr. Weiss was

appropriate. See Fed. R. Civ. P. 56(c). Finally, Mr. Hirsch argues the district

court’s decision on this issue has “denied [him] the opportunity to make a full

presentation of all of the expenses at issue at trial.” Aplt. Br. at 16. Mr. Hirsch

should have presented all evidence of material factual disputes in his opposition

to summary judgment. His failure to do so does not provide a basis to overturn

the district court’s decision.

      Mr. Hirsch also complains that the district court incorrectly calculated the

amount he owed. The district court entered judgment against Mr. Hirsch based on

one-third of $330,835.74, less $16,814.52. Aplt. App. at 116. The district court

                                         -9-
resolved the parties’ dispute over the total debt by using the figure provided by

Mr. Hirsch, $330,835.74, rather than the figure provided by Mr. Weiss,

$313,530.90. Id. For the first time on appeal, Mr. Hirsch argues that the correct

figure is in fact $313,530.90. Because this argument was not presented to the

district court, we will not consider it for the first time on appeal. See Walker v.

Mather (In re Walker), 959 F.2d 894, 896 (10th Cir. 1992).

      The judgment of the district court is AFFIRMED.

                                                     Entered for the Court

                                                     Michael R. Murphy
                                                     Circuit Judge

                                         -10-