East West Bank, A California State Banking Corporation v. 4G Metals, Inc. et al, No. 4:2016cv01917 - Document 34 (S.D. Tex. 2016)
Court Description: MEMORANDUM AND ORDER granting 26 Motion for Partial Summary Judgment as to liability on breach of contract claim and denying as to amount owed. Counsel shall appear for status conference on 12/2/16 at 10:00 a.m.(Signed by Judge Nancy F Atlas) Parties notified.(TDR, 4)
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East West Bank, A California State Banking Corporation v. 4G Metals, Inc. et al Doc. 34 United States District Court Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION EAST WEST BANK, Plaintiff, v. 4G METALS, INC., et al., Defendants. § § § § § § § November 23, 2016 David J. Bradley, Clerk CIVIL ACTION NO. H-16-1917 MEMORANDUM AND ORDER This case is before the Court on the Motion for Partial Summary Judgment (“Motion”) [Doc. # 26] filed by Plaintiff East West Bank, seeking summary judgment on the breach of contract claim. Defendants filed a Response [Doc. # 31], and Plaintiff filed a Reply [Doc. # 33]. Having reviewed the full record and applicable legal authorities, the Court grants the Motion as to the liability of all Defendants on the breach of contract claim and denies the Motion as to the amount owed. I. BACKGROUND In late 2015, Defendant 4G Metals, Inc. (“4G”) and Defendant IPAX Industrial, LLC (“IPAX”) opened separate bank accounts at Plaintiff East West Bank. Defendants Imran Shuja Khan, Desai Prateek, and Chirag A. Gandhi were authorized signers on the 4G account. Wajahat Ali Khan was originally the only authorized signer on the IPAX account, but Desai Prateek was later added as an authorized P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 Dockets.Justia.com signer. Each of the signature cards for the two accounts contains a representation that the signer has received a copy of the Deposit Agreement and agrees that the account will be governed by it. The Deposit Agreement provides that the words “you” means the owner(s) and authorized signer(s) on the account. See Deposit Agreement, Exh. A1 to Motion, p. 1. The Deposit Agreement provides further that “You agree to pay us the amount of any overdraft immediately . . ..” See id. at 16. Additionally, the Deposit Agreement provides that “Each of you is jointly and severally responsible to us for paying any and all overdrafts created by any one of the authorized signers . . ., irrespective of who signed the check or item creating the overdraft, benefitted from the payment, or contributed funds to the account.” See id. at 17. Plaintiff alleges that in May 2016, Defendants engaged in a check-kiting scheme that resulted in an overdraft in the 4G account in the amount of $874,602.26, and an overdraft in the IPAX account in the amount of $429,764.15. Plaintiff filed this lawsuit on June 29, 2016. The Motion for Partial Summary Judgment has been fully briefed and is now ripe for decision. II. STANDARD FOR SUMMARY JUDGMENT Rule 56 of the Federal Rules of Civil Procedure mandates the entry of summary judgment against a party who fails to make a sufficient showing of the existence of P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 2 an element essential to the party’s case, and on which that party will bear the burden at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc); see also Curtis v. Anthony, 710 F.3d 587, 594 (5th Cir. 2013). Summary judgment “should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a); see Celotex, 477 U.S. at 322-23; Curtis, 710 F.3d at 594. In deciding whether a genuine and material fact issue has been created, the court reviews the facts and inferences to be drawn from them in the light most favorable to the nonmoving party. Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., 336 F.3d 410, 412 (5th Cir. 2003). A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-movant. Tamez v. Manthey, 589 F.3d 764, 769 (5th Cir. 2009) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The non-movant’s burden is not met by mere reliance on the allegations or denials in the non-movant’s pleadings. See Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d 531, 545 n.13 (5th Cir. 2002); Chambers v. Sears, Roebuck and Co., 428 F. App’x 400, 407 (5th Cir. June 15, 2011). Likewise, “conclusory allegations” or “unsubstantiated assertions” do not meet the P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 3 non-movant’s burden. Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 399 (5th Cir. 2008). Instead, the nonmoving party must present specific facts which show “the existence of a genuine issue concerning every essential component of its case.” Firman v. Life Ins. Co. of N. Am., 684 F.3d 533, 538 (5th Cir. 2012) (citation and internal quotation marks omitted). In the absence of any proof, the court will not assume that the non-movant could or would prove the necessary facts. Little, 37 F.3d at 1075 (citing Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990)). III. ANALYSIS A. Legal Standard for Breach of Contract Claim Under Texas law, the elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009). B. Liability In this case, there is a Deposit Agreement between East West Bank and 4G and a Deposit Agreement between East West Bank and IPAX. There is no dispute that these Deposit Agreements are valid contracts. It is also undisputed that Plaintiff P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 4 provided banking services pursuant to the Deposit Agreement, and that East West Bank sustained damages as a result of the overdrafts. The individual Defendants argue that they are not personally liable.1 This argument fails. Each individual Defendant is an authorized signer on at least one of the accounts. The Deposit Agreement for each account provides specifically that “you” means the owner and the authorized signers on the account. See Deposit Agreement, p. 1. The Deposit Agreement provides further that “You [defined to include the authorized signers] agree to pay us the amount of any overdraft immediately . . ..” See id. at 16. Additionally, the Deposit Agreement provides that “Each of you [defined to include the authorized signers] is jointly and severally responsible to us for paying any and all overdrafts created by any one of the authorized signers . . ., irrespective of who signed the check or item creating the overdraft, benefitted from the payment, or contributed funds to the account.” See id. at 17. Consequently, the Deposit Agreement imposes liability on each authorized signer for any overdraft in the account for which he is an authorized signer. The Deposit Agreement provides also that “you (and all other authorized signers, designated agents, and the person or entity you represent if you sign as a 1 Defendants 4G and IPAX do not challenge liability on the breach of contract claim, but contest the amount of damages claimed by East West Bank. P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 5 representative of another) agree to and are bound by the rules, terms and conditions described in this Agreement.” See id. at 1. The individual Defendants argue that this provision precludes a finding of personal liability. The reference to “other” authorized signers does not, however, negate the definition of “you” in the Deposit Agreement to include each authorized signer. Individual Defendant Wajahat Khan argues that he signed only in his representative capacity and, therefore, has no personal liability. Merely placing a corporate designation after one’s signature does not relieve an individual signer of personal liability where, as here, the contract at issue imposes individual liability. See, e.g., Wood v. PennTex Res. L.P., 458 F. Supp. 2d 355, 364 (S.D. Tex. 2006) (Rosenthal, J.) (citing Am. Petrofina v. Bryan, 519 S.W.2d 484, 487 (Tex. App. – El Paso 1975, no writ)). As noted above, the Deposit Agreement provides that the words “you” means the owner(s) and authorized signer(s) on the account. See Deposit Agreement, p. 1. The Deposit Agreement provides further that “You [defined to include authorized signers] agree to pay us the amount of any overdraft immediately . . ..” See id. at 16. The Deposit Agreement provides also that “Each of you [defined to include authorized signers] is jointly and severally responsible to us for paying any and all overdrafts created by any one of the authorized signers . . ., irrespective of who signed the check P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 6 or item creating the overdraft, benefitted from the payment, or contributed funds to the account.” See id. at 17. As a result, each defendant is liable to East West Bank for the overdrafts in the 4G and IPAX accounts. East West Bank is entitled to summary judgment as to liability of each defendant on the breach of contract claim. C. Amount Owed Plaintiff asserts that the overdraft amount for the 4G account is $874,602.26, and the overdraft amount for the IPAX account is $429,764.15. In support of this assertion, Plaintiff submits an affidavit, but no documentation to support the affiant’s statement. Defendants have submitted affidavits stating that these amounts are inflated and similarly provide no documentary support. The Court cannot determine on this record the amount of the account overdrafts and, as a result, summary judgment is denied as to the amount owed. IV. CONCLUSION AND ORDER Plaintiff has presented evidence that there is an overdraft for the 4G and IPAX accounts, and that each individual defendant is responsible under the Deposit Agreement to pay the overdraft on the account(s) for which he is an authorized signer. Defendants have presented no evidence to the contrary. The amount owed by Defendants remains in dispute. As a result, it is hereby P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 7 ORDERED that East West Bank’s Motion for Partial Summary Judgment [Doc. # 26] is GRANTED as to liability on the breach of contract claim and DENIED as to the amount owed. It is further ORDERED that counsel shall appear before the Court at 10:00 a.m. on December 2, 2016, for a status conference. SIGNED at Houston, Texas, this 23rd day of November, 2016. NAN Y F. ATLAS SENIOR UNI STATES DISTRICT JUDGE P:\ORDERS\11-2016\1917MPSJ.wpd 161123.1332 8
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