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Branch Banking and Trust Co. v. The Tractor Co., Inc.

United States District Court, S.D. West Virginia, Beckley Division

September 7, 2017

BRANCH BANKING AND TRUST COMPANY, Plaintiff,
v.
THE TRACTOR COMPANY, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGEK UNITED STATES DISTRICT JUDGE.

         The Court has reviewed Plaintiff Branch Banking and Trust Company's Motion for Summary Judgment Against Defendants (Document 45) and the Memorandum of Law in Support (Document 46), the Response to Banking and Trust Company's Motion for Summary Judgment (Document 49), Plaintiff Branch Banking and Trust Company's Reply in Support of Plaintiff Branch Banking and Trust Company's Motion for Summary Judgment against Defendants (Document 51), and all accompanying exhibits. The Court has also reviewed the Plaintiff's September 1, 2017 Status Report (Document 86). For the reasons stated herein, the Court finds that the Plaintiff's motion for summary judgment against The Tractor Company should be granted.

         PROCEDURAL HISTORY AND FACTUAL BACKGROUND

         The Plaintiff, Branch Banking and Trust Company (BB&T), a citizen of North Carolina, initiated this action with the filing of a Complaint (Document 1) on September 12, 2014. Therein, BB&T asserted claims for breach of contract under West Virginia law against the Defendants, The Tractor Company, Inc. (TTC), a West Virginia corporation, Joe D. Ison (Mr. Ison), a citizen of West Virginia, and William Connolly (Mr. Connolly), a citizen of West Virginia. On October 28, 2014, TTC, Mr. Ison, and Mr. Connolly collectively filed their Answer, Affirmative Defenses, and Counterclaim (Document 12). On January 29, 2015, the Court issued a Memorandum Opinion and Order (Document 32) dismissing the counterclaim with prejudice. On September 29, 2015, after the close of discovery, BB&T filed the present motion for summary judgment. The Defendants responded on October 14, 2015, and BB&T filed its reply on October 20, 2015.

         Between May 31, 2011, and February 25, 2014, TTC signed a number of promissory notes with BB&T. During that same time, Mr. Ison and Mr. Connolly signed a number of guaranty agreements with BB&T, in which they agreed to guarantee TTC's payment of the promissory notes. TTC subsequently defaulted on each of the notes, and Mr. Ison and Mr. Connolly failed to honor the guaranty agreements. The Court will review each of the applicable agreements.

         A. Note 15

         On May 31, 2011, TTC executed a promissory note (Note 15) for $448, 000.00, wherein TTC promised to pay BB&T quarterly payments of accrued interest beginning on July 6, 2011, with a final payment of all remaining interest and principal on July 8, 2014. To secure Note 15, Mr. Ison executed a Guaranty Agreement with BB&T on May 31, 2011, wherein he unconditionally guaranteed the payment to BB&T of all notes, drafts, debts, obligations, and liabilities of TTC, with interest, when the debts became due. Mr. Connolly executed a similar agreement on May 10, 2011, wherein Mr. Connolly made similar guarantees to BB&T. Note 15 matured on June 8, 2014. The Defendants failed to pay the remaining principal and interest.

         B. Note 26

         On May 31, 2013, TTC executed a promissory note (Note 26) for $550, 000.00, wherein TTC promised to pay BB&T sixty-five consecutive payments of $9, 263.30, starting on July 15, 2013. To secure Note 26, TTC executed a Security Agreement, dated May 31, 2013, granting BB&T a secured interest in certain collateral, including a Caterpillar 2008 Motor Grader (the “Caterpillar”) in the possession of TTC. Mr. Ison executed a Guaranty Agreement for Note 26, wherein he guaranteed the prompt payment of all obligations of TTC under Note 26. Mr. Connolly executed an agreement on May 31, 2013, wherein Mr. Connolly made similar guarantees to BB&T. TTC, to date, is delinquent on its payments on Note 26. Further, Note 26 indicated that failure to pay “any part of the principal or interest … on any other liability to the Bank by any one or more of the undersigned” constituted a material default. Therefore, TTC's failure to make payments on Note 15 also constituted a default on the terms of Note 26. TTC also failed to provide financial statements required under the terms of Note 26. Finally, after selling the Caterpillar, TTC failed to obtain routine creditor information from the buyer. BB&T considered this a breach of Section 3.04 of the Loan Agreement, “Conduct of Business, ” which required TTC to “[c]ontinue to engage in an efficient, prudent, and economical manner in a business of the same general type as now conducted.” (Loan Agreement, att'd as Ex. 36 to Pl.'s Complaint, at 3.) Based on these defaults, BB&T accelerated the amount due under Note 26 on July 16, 2014.

         C. Note 27

         On June 26, 2013, TTC executed a promissory note for a principal amount of $257, 731.05 (Note 27), which required TTC to pay BB&T quarterly payments of accrued interest beginning on September 24, 2013, with a final payment due of all remaining interest and principal on June 24, 2014. Mr. Ison executed a Guaranty Agreement on Note 27 on June 26, 2013, wherein he absolutely and unconditionally guaranteed the payment of all debts, obligations, and liabilities, both primary and secondary, of TTC when such debts became due. Mr. Connolly also executed a Guaranty Agreement on Note 27 on June 26, 2013. In this agreement, Mr. Connolly unconditionally guaranteed the payment of all notes, drafts, obligations, and liabilities of TTC to BB&T, together with interest.

         Note 27 matured on June 24, 2014, and neither TTC nor the other Defendants paid the remaining principal or interest. As of September 25, 2015, the balance due on Note 27 was $285, 045.88, including principal and accrued but unpaid interest.

         D. Note 28

         On January 22, 2014, TTC executed a promissory note for a principal amount of $673, 048.02 (Note 28), which required TTC to make quarterly payments of accrued interest beginning on April 22, 2014, with a final payment of all remaining interest and the principal on January 22, 2015. Mr. Ison executed a Guaranty Agreement on Note 28 on January 22, 2014, wherein he absolutely and unconditionally guaranteed the payment of all debts, obligations, and liabilities, both primary and secondary, of TTC when such debts became due and payable. Mr. Connolly also executed a Guaranty Agreement on Note 28 on January 22, 2014. In this agreement, ...


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