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Navistar Leasing Co. v. Tango Transport, LLC

United States District Court, E.D. Texas, Sherman Division

January 10, 2017

NAVISTAR LEASING COMPANY
v.
TANGO TRANSPORT, LLC D/B/A TANGO TRANSPORT, INC., TANGO LEASING CORP., ADGO MARKETING, LLC, CANGO, INC., GMGO, INC. D/B/A GMCO, LLC, GORMAN GROUP, INC., TANGO ENTERPRISES, INC., TANGO LOGISTX INC. D/B/A TANGO LOGISTX, LLC, TANGO MOTOR TRANSIT, LLC, TANGO TRUCK SERVICES, LLC, BOBBY J. GORMAN, ROBERT E. GORMAN No. 4

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendants' Joint Motion to Abate (Dkt. #80). After reviewing the relevant pleadings and motion, the Court finds that the motion should be granted.

         BACKGROUND

         Defendants Bobby J. Gorman (“Bobby”), and Robert E. Gorman (“Robert”) seek an abatement of the current proceeding against Bobby, Robert, ADGO Marketing, LLC, and Tango Leasing Corporation (“Leasing”) (collectively “Remaining Defendants”) while a related action is pending in the bankruptcy court for the Eastern District of Texas.[1]

         In 2003, Tango sought to enter into lease agreements with Navistar. On September 29, 2003, Leasing, Bobby, and Robert executed a continuing unconditional guaranty (the “Continuing Guaranty”) with Navistar (Dkt. #46, Exhibit 1-A). Pursuant to the Continuing Guaranty, Leasing, Bobby, and Robert “absolutely and unconditionally guarantee[d]: (a) the prompt payment of all monetary obligations of any sort” incurred by Tango and owed to Navistar. Each signatory agreed to be jointly and severally liable with Tango. To this date, no party has terminated the Continuing Guaranty.

         On November 18, 2011, Tango, Bobby, and ADGO executed an Interlocking Guaranty (the “2011 Interlocking Guaranty”) with identical obligations as the Continuing Guaranty (Dkt. #46, Exhibit 1-B). On November 21, 2011, Tango entered into Master Lease Agreement No.00001 (“Master Lease No.1”) with Navistar for the lease of tractors (Dkt. #46, Exhibit 1-C). The terms of Master Lease No.1 were supplemented from time to time by “schedules.” From November 21, 2011 to about December 12, 2012, Tango executed numerous schedules to lease additional tractors from Navistar.

         In 2013, Tango began having problems routinely satisfying its monthly lease obligations to Navistar. On March 21, 2013, Tango and Navistar entered into a Rent Extension Agreement where Navistar agreed to extend the due date of certain monthly lease payments for extension fees provided in the agreement (Dkt. #46, Exhibit 1-E).

         On February 28, 2014, Tango entered a 2014 Interlocking Guaranty and Master Lease No.2 with Navistar (Dkt. #46, Exhibit 1-H; Dkt. #46, Exhibit 1-F).[2] Master Lease No.2 was supplemented from time to time by schedules. From February 28, 2014 to about June 24, 2014, Tango executed numerous schedules to lease additional tractors from Navistar.

         On October 7, 2014, Tango, Bobby, ADGO and eight other plaintiffs (the “Caddo Plaintiffs”) sued Navistar in Caddo Parrish, Louisiana regarding defects in MaxxForce engines used in Navistar's trucks. The Caddo Plaintiffs claimed that the MaxxForce engines contained defective emissions systems that caused the engines to fail before their intended useful life. This defect led to sudden breakdowns that required emergency arrangements to deliver the cargo on time. On August 31, 2015, the Caddo Plaintiffs settled with Navistar (the “Settlement”), terminating the Master Leases and Rent Extension Agreement. Contemporaneously, Navistar and Tango entered into the Reinstatement. Shortly thereafter, Tango defaulted under the Reinstatement.

         Navistar has declared the entire indebtedness owed under the Reinstatement, Master Leases, and Rent Extension Agreement (collectively “the leases”) immediately due and owing. As of April 6, 2016, Navistar is owed $26, 836, 549.93 under the leases.

         On July 1, 2016, Navistar filed its Motion for Partial Summary Judgment on Liability (Dkt. #46). In Bobby's response to summary judgment, he asserts defenses based on lack of or failure of consideration for Tango's underlying obligations on the leases (Dkt. #51). Bobby then attempts to head-off Navistar's anticipated defense by arguing that the Settlement-where Bobby and the other Caddo Plaintiffs appear to waive all defenses-is invalid. Although Bobby admittedly lacks standing to void the Settlement, Bobby informs the Court in his response that an avoidance action by Tango is imminent. On November 18, 2016, the Debtors initiated an adversary proceeding against Navistar in the bankruptcy court seeking to void the Settlement (“Adversary Proceeding”) (Dkt. #80, Exhibit A). As a result, on December 12, 2016, Robert and Bobby filed their Joint Motion to Abate (Dkt. #80) asking the Court to stay this case until the Adversary Proceeding is complete. On December 22, 2016, Navistar filed its response (Dkt. #87). On December 29, 2016, Robert and Bobby filed a reply (Dkt. #90).

         LEGAL STANDARD

         A court has broad discretion to stay proceedings in the interest of justice and in control of its docket. Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983). Proper use of this authority “calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.” Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). If there is “even a fair possibility” that a stay will damage someone else, then the proponent bears the burden of showing “a clear case of hardship or inequity.” See Id. at 255. The Court's decision to grant a stay should contemplate the following factors: (1) hardship on the movant if no stay is entered; (2) prejudice to the non-moving party if the stay is granted; and (3) judicial economy. See Wedgeworth, 706 F.2d at 545. Finally, “the court must carefully consider ...


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