KENNETH A. MARRA, District Judge.
This cause is before the Court upon Plaintiff Branch Banking and Trust Company's Amended Motion for Final Summary Judgment with Supporting Memorandum of Law (DE 196).
The relevant facts are undisputed. On September 1, 2006, Hamilton Greens, LLC ("Hamilton Greens"), Defendant Richard Bellinger ("Defendant" or "Bellinger"), Chad Labonte, Roland Labonte, and others entered into an agreement with Colonial Bank to secure a $3,375,000.00 acquisition loan for real property. (DE 196, Attach. 1 at 34). Bellinger and the Labontes were managers of Hamilton Greens.
Hamilton Greens executed a promissory note on the loan on September 5, 2006 (DE 196, Attach. 1 at 26), and Bellinger executed a continuing and unconditional guaranty on the loan that same day (DE 196, Attach. 1 at 57). The relevant portions of the guaranty provide as follows:
(DE 196, Attach. 1) (emphasis added).
On August 31, 2007, Bellinger entered into an agreement with the Labontes to transfer all of his interests in Hamilton Greens to them in exchange for their personal indemnification and best efforts to have him removed from the Colonial Bank guaranty. (DE 42, Bellinger Aff. ¶ 8). Consistent with this agreement, the Labontes requested that Colonial Bank release Bellinger as a guarantor. (DE 196, Attach. 2, Wilkinson Aff. ¶¶ 5-6). Colonial denied the request. (DE 196, Attach. 2, Wilkinson Aff. ¶ 6).
In March 2008, upon Hamilton Greens' request, Colonial extended the maturity date of the original promissory note through a Commercial Loan Extension Agreement and Renewal Promissory Note. (DE 1, Attach. 8 at 32; DE 196, Attach. 1 at 19). The Renewal Promissory Note renewed and replaced the original note, as amended by the Commercial Loan Extension Agreement, in its entirety.
In June and July of 2008, upon Hamilton Greens' request, Colonial extended the maturity date of the Renewal Promissory Note through a Mortgage, Note and Loan Documents Modification Agreement and Second Renewal Promissory Note. (DE 1, Attach. 8 at 41; DE 196 Attach. 1 at 12). The Second Renewal Promissory Note renewed and replaced the Renewal Promissory Note in its entirety.
All notes and loan agreements described above are now held by Plaintiff Branch Banking & Trust Company ("Plaintiff" or "BB & T") as successor to Colonial Bank, by asset acquisition from the FDIC, as receiver for Colonial Bank. On March 25, 2011, BB & T advised Hamilton Greens that its loan was in default for failure to make payments (DE 196, Attach. 1 at 69), and BB & T declared an acceleration of the loan obligations after Hamilton Greens failed to pay (DE 196, Attach. 1 at 72). Thus, according to BB & T, Hamilton Greens owes $3,330,232.69 as of May 2, 2011 not including certain fees, costs, and additional interest. (DE 1 ¶ 46).
BB & T alleges that Bellinger unconditionally guaranteed to repay all of Hamilton Greens' debt and that Bellinger's failure to pay constitutes a breach of the guaranty contract. (DE 1 ¶¶ 65-71). To that end, BB & T moves for summary judgment against Bellinger because the terms and conditions of Bellinger's guaranty dictate that he is liable for Hamilton Greens' debt and because Bellinger's affirmative defenses — waiver, estoppel, and failure to mitigate — do not preclude entry of summary judgment in BB & T's favor. For the reasons that follow, BB & T's motion for summary judgment is granted.
The Court may grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The stringent burden of establishing the absence of a genuine issue of material fact lies with the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court should not grant summary judgment unless it is clear that a trial is unnecessary, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and any doubts in this regard should be resolved against the moving party, see Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).
The movant "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. To discharge this burden, the movant must point out to the Court that there is an absence of evidence to support the nonmoving party's case. Id. at 325, 106 S.Ct. 2548.
After the movant has met its burden under Rule 56(a), the burden of production shifts and the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion
Essentially, so long as the non-moving party has had an ample opportunity to conduct discovery, it must come forward with affirmative evidence to support its claim. Anderson, 477 U.S. at 257, 106 S.Ct. 2505. "A mere `scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990). If the evidence advanced by the non-moving party "is merely colorable, or is not significantly probative, then summary judgment may be granted." Anderson, 477 U.S. 242, 249-50, 106 S.Ct. 2505.
The terms of the guaranty contract between Bellinger and BB & T provide that the "[g]uaranty shall, in all respects, be governed by and construed in accordance with the laws of the State of Florida, including all matters of construction, validity and performance...." (DE 196, Attach. 1 ¶ 24). In Florida, "a continuing guaranty remains in effect until revoked ... [and] covers all transactions, including those arising in the future, which are within the ... contemplation of the agreement." Causeway Lumber Co. v. King, 502 So.2d 80, 81 (Fla.Dist.Ct.App. 1987) (citing Brann v. Flagship Bank of Pinellas, N.A., 450 So.2d 237 (Fla.Dist.Ct. App.1984) and Fidelity Nat'l Bank of S. Miami v. Melo, 366 So.2d 1218, 1221 (Fla. Dist.Ct.App.1979)). Thus, "[a] guarantor is bound by an agreement in the guaranty contract which permits extensions of time for performance of the principal contract, and when the guaranty agreement expressly authorizes such extensions, an extension of time within the contemplation of the agreement does not discharge the guarantor." Champion Home Builders, Inc. v. Highridge Sales, Inc., 472 So.2d 836, 837 (Fla.Dist.Ct.App.1985) (citations omitted). Moreover, "under a continuing guaranty, in the absence of an express contractual provision to the contrary ... the creditor has no obligation to notify the guarantor regarding its transaction with the principal debtor." Causeway Lumber Co., 502 So.2d at 82 (citations omitted). "[A] guarantor is released," however, "where the creditor materially alters the principal debtor's obligation to the detriment of the guarantor without the guarantor's consent." Miami Nat'l Bank v. Fink, 174 So.2d 38 (Fla.Dist.Ct.App.1965).
Here, BB & T's position is straightforward: Bellinger signed an absolute and unconditional guaranty to repay the full indebtedness due and owing from Hamilton Greens to BB & T, Hamilton Greens defaulted, and that default entitles BB & T to enforce the terms and conditions of Bellinger's guaranty. In response, Bellinger first argues that BB & T waived its ability to enforce the guaranty by materially modifying the loan agreement through extensions of the loan's maturity date post-notice of Bellinger's withdrawal as a guarantor.
All three of Bellinger's affirmative defenses fail as a matter of law. "The elements of equitable estoppel are (1) a representation as to a material fact that is contrary to a later-asserted position, (2) reliance on that representation, and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon." Florida v. Harris, 881 So.2d 1079, 1084 (Fla.2004) (citation omitted). The three elements of waiver are "(1) the existence of a right which may be waived; (2) actual or constructive knowledge of the right; and (3) the intent to relinquish the right. Proof of these elements may be express, or implied from conduct or acts that lead a party to believe a right has been waived." Bueno v. Workman, 20 So.3d 993, 998 (Fla.Dist. Ct.App.2009) (citation omitted).
The basis for Bellinger's estoppel defense is that the repayment deadline contained in the original loan agreement and guaranty was a representation that Bellinger justifiably relied on in expecting that BB & T would not modify the loan due date without his consent. Had BB & T notified Bellinger to get his consent, the argument goes, Bellinger could have insisted that the assets be liquidated at a time when their value could cover the outstanding amount of the loan. Notwithstanding that Bellinger was no longer involved in Hamilton Greens and thus would ostensibly have no say in whether Hamilton Greens' assets could be liquidated, whether Bellinger could control that decision is irrelevant: the clear and express terms of the guaranty give BB & T the right to modify the loan without notifying him, getting his consent, or affecting his continuing liability. (DE 196, Attach. 1 ¶¶ 1, 2, 5, 7) Thus, the mere inclusion of an original repayment deadline of the loan could not be a material misrepresentation because Bellinger contractually agreed to let BB & T extend that deadline without his involvement and without affecting his continuing obligations as guarantor. Moreover, Bellinger could not justifiably rely on the original due date as a material representation and expect that BB & T would not modify that date without his consent when he contractually agreed otherwise. Bellinger's estoppel defense thus necessarily fails as a matter of law based on the clear and unambiguous terms of the guaranty.
To determine whether BB & T waived its right to enforce Bellinger's guaranty under Florida law, the Court turns to Miami National Bank v. First International Realty Investment Corporation et al., 364 So.2d 873 (Fla.Dist.Ct.App. 1978), a case at the heart of the parties' dispute over the enforceability of the guaranty. In Miami National Bank, a borrower executed a 90-day promissory note on a $50,000.00 one-year loan from the appellant lender. An individual guarantor personally guaranteed the note, which was renewable every 90 days so that the lender could review the borrower and guarantor's financial condition.
After the first two 90-day notes were executed, the individual guarantor notified the lender both orally and in writing that he was revoking his guaranty. A third 90-day note was executed. Before the fourth 90-day note was executed, however, the
When the borrower defaulted on the fourth note, the lender filed suit to enforce the personal guaranty. The trial court granted summary judgment in favor of the guarantor because he "communicated the revocation of his personal guaranty to the [lender] which subsequently removed his name from the list of personal guarantors." In a two-paragraph per curiam opinion citing no relevant legal support and providing no legal reasoning, the appellate court affirmed.
Bellinger cites Miami National Bank for the proposition that a lender may not rely upon a guaranty beyond the maturity date of the loan if, before the renewal, the lender has been notified of the guarantor's withdrawal. This Court does not adopt Bellinger's expansive interpretation of the Miami National Bank decision.
As a threshold matter, unlike in Miami National Bank, Bellinger has provided no evidence that he notified BB & T that he was revoking his guaranty. While Bellinger has provided evidence that he entered into an agreement to transfer all of his interests in Hamilton Greens to the Labontes in exchange for their personal indemnification and best efforts to have him released from the guaranty, BB & T has countered with evidence that the request that Bellinger be released was rejected. (DE 196, Attach. 2, Wilkinson Aff. ¶ 6); see also Sanz v. Prof'l Underwriters Ins. Agency, 560 So.2d 1254, 1254 (Fla.Dist.Ct. App.1990) ("The termination of an interest in a corporation, in and of itself, does not also terminate liability under a separate personal guaranty agreement unless the termination provisions of the agreement are complied with.") (citing Kerr-McGee Chem. Corp. v. CHB Farms, Inc., 340 So.2d 483 (Fla.Dist.Ct.App.1976)). BB & T's rejection of the attempt to release Bellinger provides support for distinguishing Miami National Bank, where the lender ostensibly recognized the guarantor's revocation by removing him from the list of guarantors. Bellinger's suggestion that BB & T's subsequent conduct in this case shows recognition of a revocation is unavailing: consistent with the terms of the guaranty, BB & T was under no obligation to: 1) accept Bellinger's request for a release, revocation or withdrawal; 2) contact him about the renewals; 3) secure his signature on the loan renewals; 4) ask him to execute new guaranties, or 5) receive his consent to renew the loan. As set forth in the operative document, Bellinger agreed to "unconditionally and irrevocably" guaranty to BB & T the full payment when due, by acceleration or otherwise, and performance of, any instrument evidencing the obligation of Hamilton Greens under any other agreement executed in connection with the promissory note or any amendment, renewal or extension thereof. (DE 196, Attach. 1 ¶ 1). Bellinger further agreed as follows:
(DE 196, Attach. 1 ¶¶ 2, 4, 5, 6, 7) (emphasis added). Bellinger's waiver argument consequently fails because, based on the plain and unambiguous language of the guaranty, and based on the lack of any record evidence indicating that BB & T intend to relinquish its right to enforce Bellinger's guaranty.
The decision of Broward Bank v. Southeastern X-Ray Corp., 463 So.2d 440 (Fla. Dist.Ct.App.1985), gives further support to the Court's conclusion that Bellinger's attempted revocation does not relieve him of liability on the guaranty. In Broward Bank, the borrower executed a promissory note on a $50,000.00 loan from the bank. An individual guarantor personally guaranteed the note. Subsequently three renewal notes that extended the time for payment of the original obligation were executed by the borrower.
Before execution of the third renewal, the guarantor requested that his name be removed as guarantor, and the bank replied that "liability for the existing loan... would continue until the loan was paid, but future loans would be considered without his guaranty." Id. at 441. After execution of the third renewal, the borrower defaulted and the bank sought to enforce the guaranty.
The issue, as framed by the appellate court, was "whether the renewal notes were mere extensions of the time for payment of the original ... loan, or whether each renewal should be construed as evidencing payment in full of each prior loan and the making of a new loan." Id. Adopting the reasoning of the Utah Supreme Court in Marking Systems, Inc. v. Interwest Film Corp., 567 P.2d 176 (Utah 1977), the Broward Bank court held that the guarantor's liability
Broward Bank, 463 So.2d at 441 (emphasis added). The "clear and unambiguous terms" of the unconditional, continuing guarantee that the court relied on provided as follows:
As set forth above, the guarantee at issue here — which, unlike the guarantee in Broward Bank, does not expressly allow for revocation by the guarantor — provides in terms even more express and unambiguous that whether Bellinger revoked or withdrew his personal guaranty is irrelevant: Bellinger remains liable on the guaranty notwithstanding that he was never contacted about the renewals, never executed new guaranties, and never consented to the loan renewals. Bellinger contractually agreed to remain liable.
Bellinger's mitigation-of-damages defense fails on similar grounds. BB & T was under no contractual duty to mitigate, to enforce the loan agreement as originally written thereby "squandering" an opportunity to avoid damages, or to notify Bellinger of the loan modifications which, if revealed (according to Bellinger), "would have set into motion a process preventing the loan extensions, forcing the liquidation of the asset at a time that the market was still robust, securing the repayment of the loan in full, and avoiding this action altogether." (DE 197 at 13). The crux of Bellinger's position regarding mitigation appears to be that BB & T should bear the loss of Hamilton Greens' default because BB & T could have refused to extend the maturity date of the loan and thereby forced an earlier default when the value of the property would have covered the loan. Bellinger's argument misses the point: BB & T could have refused to extend the maturity date of the loan if it chose to; but it had no obligation to do so. In fact, BB & T's decision to honor Hamilton Greens' requested extension of the maturity date is consistent with the actions of a lender giving a borrower every opportunity to succeed in its venture. Bellinger would have the Court penalize BB & T for not seeking a borrower's default.
The relevant facts in this case are undisputed. At the heart of Bellinger's position in this case is the notion that, as a matter of law, it is fundamentally unfair to seek liability against a guarantor for a renewal note entered into after the guarantor seeks to withdraw the guaranty. Here, however, Bellinger guaranteed that he would pay Hamilton Greens' debt in clear and unambiguous terms. He did not. Bellinger's refusal to pay the debt that he guaranteed warrants the entry of summary judgment against him as a matter of law.
Accordingly, it is hereby
