Huntington National Bank v. Physician's Auditing and Billing Services Inc.
- Jeffrey Bryan
- 0:22-cv-02271
- U.S. District Court · District of Minnesota
- 14
In Huntington National Bank v. Physician’s Auditing, Judge Bryan granted in part and denied in part summary judgment, awarded damages from October 8, 2022, and dismissed other claims.
Huntington National Bank received a partial merits ruling requiring Physician’s Auditing and Billing Services Inc. and Douglas Davis to pay specified contract damages jointly and severally beginning October 8, 2022, with attorneys’ fees and costs to be determined after final judgment. Huntington’s other claims were dismissed, with Counts III and IV dismissed without prejudice and Counts V and VI dismissed with prejudice.
What happened
In Huntington National Bank v. Physician’s Auditing and Billing Services Inc., PABS borrowed money to buy computer equipment and software and Douglas Davis guaranteed the loan. PABS confirmed that it had received and accepted the equipment, but the equipment was never delivered. PABS later stopped making payments, and Huntington sued PABS and Davis.
The court ruled that receiving the equipment was not a condition that had to occur before PABS’s repayment duty began. The parties agreed that PABS stopped paying, but disagreed about when the missed payments began, so the court could not award damages for the earlier disputed period.
Judge Jeffrey M. Bryan granted in part and denied in part Huntington’s summary-judgment motion on the contract claims. The court denied relief for August 8 through October 7, 2022, and granted relief beginning October 8, 2022, awarding specified unpaid installments, future installments, a penalty, late fees, and attorneys’ fees and costs to be determined later. The court dismissed the equipment-related claims without prejudice and dismissed the unjust-enrichment and promissory-estoppel claims with prejudice.
The detailed version
- Huntington National Bank v. Physician's Auditing and Billing Services Inc. · No. 0:22-cv-02271
- Jeffrey M. Bryan
- June 4, 2024
Background
Physician’s Auditing and Billing Services Inc. entered into an Installment Payment Agreement with Huntington National Bank to finance a $339,359.05 equipment purchase. PABS assigned Huntington a security interest in the equipment and confirmed that the equipment had been delivered, accepted, and found satisfactory. Huntington then paid the financing amount directly to the equipment vendor. The record showed that PABS never received the equipment.
PABS made monthly payments for more than a year but later stopped paying. Huntington contended that the last payment was made in July 2022, while PABS presented evidence indicating that its last payment was made in September 2022. Douglas Davis, PABS’s CEO and sole shareholder, had guaranteed PABS’s obligations under the agreement.
Huntington asserted six claims: breach of the installment agreement against PABS; breach of the guaranty against Davis; claims seeking delivery of the equipment and a declaration concerning priority in the equipment; and alternative claims for unjust enrichment and promissory estoppel. Huntington moved for summary judgment on the two contract claims.
Contract Claims
The court held that the undisputed evidence established that PABS breached the installment agreement by stopping its monthly payments and that Davis breached the guaranty by failing to cure PABS’s breach. The court rejected Defendants’ argument that actual receipt of the equipment was a condition precedent—that is, an event that had to occur before PABS’s payment obligation arose.
The installment agreement required PABS to make monthly payments beginning one month after Huntington funded the loan. The court found no clear and unequivocal language making repayment depend on actual delivery of the equipment. The agreement instead required PABS to provide confirmation that the equipment had been accepted, and PABS undisputedly provided that confirmation. The court also noted that the payment obligation was described as absolute and unconditional.
The court nevertheless found a genuine dispute of material fact about when PABS first missed a payment. Because summary judgment cannot resolve conflicting evidence or determine credibility, the court denied Huntington’s motion for the period from August 8, 2022, through October 7, 2022. The court granted the motion for the period beginning October 8, 2022.
Damages and Fees
Beginning October 8, 2022, Huntington was awarded jointly and severally against PABS and Davis:
- $99,569.40 for 15 overdue and unpaid monthly installments from October 8, 2022, through December 8, 2023; - $172,147.75 representing the present value of 28 remaining installments at 6.49% interest; - $6,885.91 as a 4% contractual penalty; and - $9,293.20 in late fees.
The order states that Huntington’s reasonable attorneys’ fees and costs will be determined after final judgment. The court found Huntington’s request for fees reasonable but did not set the final award at this stage.
Other Claims and Disposition
The court dismissed Counts III and IV, involving delivery of the equipment and priority of Huntington’s interest, without prejudice under Federal Rule of Civil Procedure 41(a)(2). This means the order did not bar those claims from being brought again.
The court dismissed Counts V and VI—unjust enrichment and promissory estoppel—with prejudice because the installment agreement governed the parties’ relationship. The order therefore states that Huntington’s motion for summary judgment on Counts I and II was GRANTED IN PART and DENIED IN PART, while Counts III through VI were dismissed as separately specified.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.