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Amplicon, Inc. v. Midatlantic Recycling Technologies

December 28, 1999


The opinion of the court was delivered by: Jerome B. Simandle U.S. District Judge



SIMANDLE, District Judge

This case is before the court upon motion by plaintiff, Amplicon, Inc., for an Order amending and supplementing the decision and Order filed November 23, 1999 (the November 23rd Order). That Order, for reasons expressed in the court's Oral Opinion at the hearing on November 22, 1999, granted plaintiff's motion for temporary replevin of certain leased machinery from defendant's premises, and denied, without prejudice, plaintiff's motion for permanent replevin, and stayed the order of temporary replevin until January 7, 2000, and required plaintiff to post a $1 million bond with the Clerk of Court by January 8, 2000, and provided that the Order shall dissolve if, by January 7, 2000, defendant presents this Court and plaintiff with an affidavit certifying that it has come current with its payments to plaintiff in the total sum of $433,182 representing lease payments due from July 1, 1999 through January 1, 2000.

Plaintiff seeks to amend the court's calculation of the amount due, urging that the amount due as of January 7, 2000, pursuant to Amplicon's exercise of Option (c) under the Lease's default clause, should consist of the full cost of the leased property [$4,019,133.20], plus the pro- rated rental fees [$433,182.00], plus accrued but unpaid late charges [$36,669.36] plus accrued but unpaid interest [$26,771.26], for a total of $4,515,755.82.

Defendant opposes this motion, arguing that defendant Midatlantic Recycling Technologies, Inc. (MART) denies having ratified the documents upon which the delinquency is claimed, and that "Amplicon stopped sending invoices" for these monthly lease payments so that MART's non- remittance of payments to Amplicon was somehow a result of Amplicon's own making.

In response to Amplicon's motion, this court, by letter of December 9, 1999, eliminated from the present motion the request by Amplicon for the full cost of the leased property, namely, $4,019,133.20. The court explained that its order of temporary replevin was not the equivalent of a judgment determining the sums owed, and noted that the defendant may well ultimately owe the $4 million cost of the leased property, but that this was not properly being determined at this time. The court instead saw itself as called upon to balance the equities for and against replevin and found that, notwithstanding the ultimate likelihood of Amplicon's ability to prove a breach of the lease, the court's order should instead attempt, as best as possible, to reinstate the legitimate expectations of Amplicon to receive its monthly lease payments upon this operating machinery. Amplicon's present motion to add the full cost of the leased property to the amount due from MART on January 7, 2000, is denied.

Regarding the accrued but unpaid late charges and the accrued but unpaid interest, however, this court agrees with Amplicon. It is likely, as this court has previously found, that Amplicon will prove its entitlement to the unpaid monthly lease rental fees from MART, which contracted for and continues to use the processing machinery in question as a major producer of MART's revenue. The court calculated previously the pro-rated rental fees of $433,182, but overlooked the fact that unpaid late charges and unpaid interest have also accrued, or will have accrued as of January 7, 2000, pursuant to Section 9 of the Lease. Section 9 provides in relevant part, "whenever any amount due under the lease is not received by Amplicon or its assignee when due, Lessee shall pay a delinquency charge equal to 5% of the amount the due (or the maximum allowed by law) for the month in which the amount is due and again for each month that the amount remains unpaid." (See Exhibit A to July 26, 1999 Affidavit of Michael L. McClendon). This rpovision for delinquency charges was amended as set forth in Addendum "1," which states:

"Past due installments of rent (or any portion thereof) which are not paid within 10 days after their due date shall be subject to a one time delinquency charge of 5% of the amount due, but not exceeding the lawful maximum, if any. Any rent or other installment not paid to Lessor when due hereunder shall bear interest, both before and after judgment or termination hereof, at the lesser of 18% per annum o[r] the maximum rate allowed by law." (See Exhibit B to Affidavit of Michael L. McClendon, filed July 27, 1999.)

The amount of the delinquency charge which will have accrued by January 7, 2000 due to MART's non-payment, is $36,669.36. (See Affidavit of Sue E. Wasner, filed Dec. 3, 1999, at paragraph 4.)

Additionally, interest is due upon the unpaid lease sums pursuant to Section 9 of the Lease, as amended by Addendum "1", supra. The amount of interest has been computed through January 7, 2000 as $26,771.26. (See Affidavit of Sue E. Wasner at paragraph 4.)

Moreover, the claim of MART that its rents were not actually due and payable because Amplicon failed to send specific notice from July 1, 1999 through January 1, 2000, does not hold water. Paragraph 5 of the Lease reads, in relevant part, "All rents shall be paid without notice or demand...." (Exhibit A to Affidavit of Michael L. McClendon, filed July 26, 1999). Thus, there is no equitable reason why MART should not be required to bring its account current by payment of the past due and accrued interest and late fees. MART, and not Amplicon, has had the use of these funds, and MART, not Amplicon, has had the use of the leased machinery. The delinquency charge and the interest charge recognize the value of the withheld lease payments and the penalty for the fiscal emergency of MART's own making.

Therefore, plaintiff Amplicon has proved that the court overlooked the unpaid late charges and unpaid interest, and that these amounts, respectively $36,669.36 and $26,771.26, must also be paid if the temporary replevin is to be stayed. These additional accruals total $63,440.62.

MART argues that if these sums are also to be paid, it should receive an additional period of time until April 1, 2000 to do so. MART's attorney states, in a flip non-sequitur, that "the April 1 date is appropriate -- only a fool would pay between $433,182 and $496,622 to use the SRS equipment for less than three additional months." (Defendant's Fourth Answering Brief to Order to Show Cause, Dec. 15, 1999, at p. 3.) This motion was filed on December 3, 1999, and it has been decided today, 25 days later. Today's Order is the first occasion when MART knows with certainty that this additional sum ($63,440.62) is also a past due obligation which must be met. When this court stayed the Order of Temporary Replevin until January 7, 2000, it did so in order to enable MART, together with MART's corporate guarantor, American Eco, to have sufficient time to raise this substantial fund. That obligation is not changed by this amendment, and the November 23rd order will not be amended to push back the date of January 7, 2000 upon which the sum of accrued leased payments ($433,182), must be paid and certified by affidavit to the court as having been paid. The additional sum payable, namely $63,440.62 in accrued interest and late charges, will be due 25 days from today, namely, January 22, 2000, a Saturday, which becomes January 24, 2000. The amended Order will thus require that, in addition to the obligations already set forth, the defendant, MART, shall bring current its past due interest and late fees in the amount of $63,440.62, and certify same by affidavit to this court not later than January 24, 2000. The amended order will further provide that failure to do so will ...

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