Branch Banking and Trust Company v. Hamilton Greens, LLC et al
Filing
209
OPINION AND ORDER granting 196 Amended Motion for Summary Judgment. Signed by Judge Kenneth A. Marra on 4/29/2013. (ir)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-80507-CIV-MARRA
BRANCH BANKING AND TRUST COMPANY,
a North Carolina banking corporation, successor-ininterest to Colonial Bank by Asset Acquisition from
the FDIC as Receiver for Colonial Bank,
Plaintiff,
v.
HAMILTON GREENS, LLC, a Florida limited
liability company, DEVCON LIVINGSTON
GREENS, LLC, a Florida limited liability company,
BLG ENTERPRISES, LLC, a Florida limited
liability company, RICHARD BELLINGER,
individually, CHAD LABONTE, individually, and
ROLAND LABONTE, individually,
Defendants.
_____________________________________/
OPINION AND ORDER
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).1 Defendant
Richard Bellinger responded. (DE 197). Plaintiff replied. (DE 202). The Court has considered the
briefs of the parties and the record, and is otherwise advised in the premises.
I. Background
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
1
Plaintiff moves for summary judgment against Defendant Richard Bellinger only.
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:
NOW, THEREFORE, in consideration of the Lender’s making the Loan and accepting
the Note, Mortgage and related documents, which it is acknowledged and agreed that
Lender is doing in full reliance hereon, and as an inducement to Lender to do so and
to make advances pursuant thereto, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Guarantor hereby
irrevocably covenants, warrants and agrees as follows:
1. That notwithstanding any provision in the Note, Mortgage or in any other
agreement or document, Guarantor hereby unconditionally and irrevocably guarantees
to Lender the full payment when due, by acceleration or otherwise, and performance
of, any and all Liabilities, as described herein of the Borrower to Lender. The term
“Liability” or “Liabilities” as used herein shall include, without limitation, (i) any
and all liabilities and obligations of Borrower to Lender as evidenced by the Note, and
any and all indemnifications set forth in the Note, or any other document executed by
Borrower in favor of Lender; (ii) every promise or undertaking of the Borrower to
repay loans heretofore, now or hereafter made to the Borrower by the Lender and all
interest and other charges thereon; (iii) every other instrument now or hereafter
evidencing the obligation of the Borrower under any other agreement executed in
connection with the Note or any amendment, renewal or extension thereof; (iv)
every mortgage or other security agreement now or hereafter in effect securing
payment of any or all of the foregoing Liabilities or any amendment, renewal or
extension thereof; and (v) all obligations of the Guarantor hereunder, however and
whenever incurred or evidenced, whether primary, secondary, direct, indirect,
absolute, contingent, sole, joint or several, due or to become due, or which may be
herein or hereafter contracted or acquired, or incurred directly or indirectly in respect
thereof; and all extensions or renewals thereof and all sums payable under or by virtue
thereof including, without limitation, all amounts of principal and interest and all
expenses (including attorney’s fees and costs of collection as specified therein)
incurred in the collection thereof or the enforcement of rights thereunder, whether
arising in the ordinary course of business or otherwise, and whether held or to be held
by Lender for its own account or as agent for another or others. The term Liabilities
as used herein shall include all liabilities of any successor entity or entities of
Borrower to Lender, unless Guarantor and Borrower are released pursuant to the Note.
2
It is expressly understood and agreed that this is a continuing guaranty and that the
obligations of the Guarantor hereunder are and shall be absolute under any and all
circumstances including, but not limited to, the foreclosure of the Mortgage. The
Guarantor acknowledges having received, reviewed and approved the Note, Mortgage
and related documents referred to herein.
2. Lender may at any time and from time to time (whether before or after revocation
or termination of this Guaranty) without notice to the Guarantor (except as required
by law), without incurring responsibility to the Guarantor, without impairing,
releasing or otherwise affecting the obligations of the Guarantor in whole or in part
and without the endorsement or execution by the Guarantor of any additional consent,
waiver or guaranty: (a) change the manner, place or terms of payment, and change
or extend the time of or renew or alter, any Liability or installment thereof, or any
security therefor, and may loan additional monies or extend additional credit to
Borrower, with or without security, thereby creating new Liabilities the payment of
which shall be guaranteed hereunder, and the guaranty herein made shall apply to
the Liabilities as so changed, extended, renewed, increased or otherwise altered . . . .
*
*
*
4. Guarantor further agrees that it shall not be released from Guarantor’s
obligations hereunder by reason of any amendment to or alteration of the terms and
conditions of the Note or any related Loan document or the indebtedness arising
thereunder, nor shall Guarantor’s obligations hereunder be altered or impaired by
any delay by Lender in enforcing the terms and obligations of the Note or any other
document evidencing or securing the Loan or by any waiver of any default by
Lender under the Note or any related Loan document, it being the intention that
Guarantor shall remain fully liable hereunder, notwithstanding any such event.
5. No extension of the time of payment or performance of any obligation hereunder
guaranteed, or the renewal thereof, nor delay in the enforcement thereof or of this
Guaranty, or the taking, exchanging, surrender or release of other security therefor
or the release or compromise of any liability of any party shall affect the liability of
or in any manner release the Guarantor, and this Guaranty shall be a continuing
one and remain in full force and effect until each and every obligation hereby
guaranteed shall have been fully paid and performed.
6. That until the Guarantor is released as hereinbefore described, Guarantor shall
not be released by any act or thing which might, but for this provision of this
Guaranty, be deemed a legal or equitable discharge of Guarantor, or by reason of any
waiver, extension, modification, forbearance or delay by Lender, or Lender’s failure
to proceed promptly or otherwise, or by reason of any further obligation or
agreement between any owner of the Property and the then holder of the Note
secured thereby relating to the payment of any sum secured thereby or to any of the
3
other terms, covenants and conditions contained therein, and Guarantor hereby
expressly waives and surrenders any defense to Guarantor’s liability hereunder
based upon any of the foregoing acts, things, agreements or waivers. . . .
7. Lender shall not be required to give any notice to Guarantor hereunder in order
to preserve or enforce Lender’s rights hereunder (including, without limitation,
notice of any default under or amendment to the Note or other documents
evidencing or securing the loan made thereunder), any such notice being expressly
waived by Guarantor. Upon the occurrence of a default under the Note, or any related
document, and expiration of applicable grace period, Lender is hereby authorized, at
any time and from time to time, without notice to Guarantor or to any other person,
any such notice being hereby expressly waived, to immediately set off, appropriate
and apply any and all deposits (general or special) and any other indebtedness at any
time held or owing by Lender to or for the credit or the account of Guarantor against
and on account of the obligations and liabilities of Guarantor hereunder, except trust
or agency accounts. Notwithstanding any payment or payments hereunder or any such
set-off, appropriation or application, until such time as all amounts owing to Lender
have been paid in full, Guarantor shall not be subrogated to any of the rights of Lender
against Borrower under the Note, or any other Loan document, or as to the security for
the Loan, or entitled to a tender, redelivery or reassignment of the Note, or any other
collateral security given for the Loan.
8. Guarantor agrees that is shall make no claim or set-off, defense, recoupment or
counterclaim of any sort whatsoever, nor shall Guarantor seek to impair, limit or
defeat in any way its obligation hereunder. Guarantor hereby waives any right to such
a claim in limitation of their obligations hereunder. Guarantor expressly waives any
defense based upon any election of remedies of Lender, which destroys or otherwise
impairs the subrogation rights of the Guarantor or the right of the Guarantor to
proceed against the Borrower for reimbursement, or both, or upon failure by Lender
(which shall have no duty in that regard) to inform the Guarantor of any facts it may
now or hereafter know about the Borrower, regardless of whether Lender has reason
to believe that any such facts materially increase the risk beyond that which the
Guarantor intends to assume or has reason to believe that such facts are unknown to
the Guarantor or has a reasonable opportunity to communicate such facts to the
Guarantor, it being understood that the Guarantor are [sic] fully responsible for being
and keeping informed of the financial condition of the Borrower and of all
circumstances bearing on the risk of performance hereby guaranteed.
*
*
*
17. Guarantor agrees that no delay on the part of Lender in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise by Lender
of any right or remedy shall preclude other or further exercise thereof or the exercise
4
of any other right or remedy; nor shall any modification or waiver of any of the
provisions of this Guaranty be binding upon Lender except as expressly set forth in
writing duly signed and delivered on behalf of Lender. No action of Lender permitted
hereunder shall in any way affect or impair the rights of Lender and the obligation of
the Guarantor under this Guaranty. This Guaranty shall be enforceable,
notwithstanding any right or power of the Borrower or anyone else to assert any claim
or defense as to the invalidity or unenforceability of any obligation, and no such claim
or defense shall affect or impair the obligations of the Guarantor hereunder.
18. Lender shall not be bound to take any steps necessary to preserve any rights in any
of the Property of the Guarantor against prior parties who may be liable in connection
therewith, and the Guarantor hereby agrees to take any such steps. Lender may
nevertheless at any time after Borrower’s or Guarantor’s default and after
expiration of applicable grace periods: (a) take any action it may deem appropriate
for the care or preservation of such property or of any rights of the Guarantor or
Lender therein, (b) demand, sue for, collect or receive any money or property at any
time due, payable or receivable on account of or in exchange for any property of the
Guarantor, (c) compromise and settle with any person liable on such Property, or (d)
extend the time of payment or otherwise change the terms thereof as to any party
liable thereon, all without notice to, without incurring responsibility to, and without
affecting any of the obligations of the Guarantor.
*
*
*
24. This Guaranty 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) (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
5
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.
In March, June, and July of 2009, upon Hamilton Greens’ request, Colonial extended the
maturity date of the Second Renewal Promissory Note through another Commercial Loan Extension
Agreement, a Second Mortgage, Note and Loan Documents Modification Agreement, and a Third
Renewal Promissory Note. (DE 1, Attach. 8 at 58; DE 1, Attach. 9 at 1; DE 196, Attach. 1 at 5). The
Third Renewal Promissory Note renewed and replaced the Second Renewal Promissory Note in its
entirety. 2
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
2
Colonial knew that Bellinger no longer had an interest in Hamilton Greens and would not sign any new loan
renewals in the Fall of 2007— before any of the promissory note renewals. (DE 196, Attach. 2, W ilkinson Aff. ¶ 6).
Nevertheless, Colonial renewed the notes without notifying Bellinger or receiving his consent or signature.
6
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.
II. Legal Standard
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 (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 (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 (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. 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.
After the movant has met its burden under Rule 56(a), the burden of production shifts and the
7
nonmoving party “must do more than simply show that there is some metaphysical doubt as to the
material
facts.”
Matsushita
Electronic
Industrial
Co.
v.
Zenith
Radio
Corp.,
475 U.S. 574, 586 (1986). “A party asserting that a fact cannot be or is genuinely disputed must
support the assertion by citing to particular parts of materials in the record . . . or showing that the
materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party
cannot produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1)(A) and (B).
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. “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.
III. Analysis
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
8
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.3 Second, Bellinger argues that BB&T should be estopped
from enforcing the terms of his guaranty because he justifiably and detrimentally relied on BB&T’s
material misrepresentation that the repayment deadline in the original loan agreement and guaranty
would not be altered.4 Finally, Bellinger argues that BB&T’s failure to mitigate its damages—i.e.,
3
It is undisputed that no additional principal was advanced by BB&T’s predecessor at the time of these
extensions.
4
Bellinger’s allegation of misrepresentation is based on nothing more than his inference that BB&T would not
modify the loan or extend its maturity date because the original loan agreement and guaranty specified a repayment
deadline. In other words, the only representation upon which Bellinger relies is the date specified in the original loan
9
BB&T’s failure to enforce the loan agreement as originally written at a time when, according to
Bellinger, the value of the property would have covered a default on the loan—precludes the entry
of summary judgment.
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
agreement and guaranty.
10
¶¶ 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 lender requested an update from the
guarantor on his financial status. The guarantor responded in writing that he already notified the
lender of his revocation, but the lender executed the fourth note anyway.
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
11
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.5
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
5
The Court recognizes that “[t]here is a split in case law as to whether a guarantor is released from liability if,
after revocation of a continuing guaranty, a bank makes further extensions or renewals without the consent of the
guarantor.” Fed. Deposit Ins. Corp. v. Moore, 879 P.2d 78, 80 (N.M. 1994) (collecting sources). The Court need not
decide whether Bellinger’s conduct in this case constituted a valid revocation because, even assuming he did revoke, that
revocation does not absolve him of liability on the guaranty. As detailed below, Florida law dictates that— at least in
situations where the express terms of the guaranty are clear and unambiguous— guarantors are responsible for renewals
made after revocation.
12
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:
2. Lender may at any time and from time to time (whether before or after revocation
or termination of this Guaranty) without notice to the Guarantor (except as required
by law), without incurring responsibility to the Guarantor, without impairing,
releasing or otherwise affecting the obligations of the Guarantor in whole or in part
and without the endorsement or execution by the Guarantor of any additional consent,
waiver or guaranty: (a) change the manner, place or terms of payment, and change or
extend the time of or renew or alter, any Liability or installment thereof, or any
security therefor, and may loan additional monies or extend additional credit to
Borrower, with or without security, thereby creating new Liabilities the payment of
which shall be guaranteed hereunder, and the guaranty herein made shall apply to
the Liabilities as so changed, extended, renewed, increased or otherwise altered . . . .
4. Guarantor further agrees that it shall not be released from Guarantor’s obligations
hereunder by reason of any amendment to or alteration of the terms and conditions
of the Note or any related Loan document or the indebtedness arising thereunder, nor
shall Guarantor’s obligations hereunder be altered or impaired by any delay by
Lender in enforcing the terms and obligations of the Note or any other document
evidencing or securing the Loan or by any waiver of any default by Lender under the
Note or any related Loan document, it being the intention that Guarantor shall remain
fully liable hereunder, notwithstanding any such event.
5. No extension of the time of payment or performance of any obligation hereunder
guaranteed, or the renewal thereof, nor delay in the enforcement thereof or of this
Guaranty, or the taking, exchanging, surrender or release of other security therefor
or the release or compromise of any liability of any party shall affect the liability of
13
or in any manner release the Guarantor, and this Guaranty shall be a continuing one
and remain in full force and effect until each and every obligation hereby guaranteed
shall have been fully paid and performed.
6. That until the Guarantor is released as hereinbefore described, Guarantor shall not
be released by any act or thing which might, but for this provision of this Guaranty,
be deemed a legal or equitable discharge of Guarantor, or by reason of any waiver,
extension, modification, forbearance or delay by Lender, or Lender’s failure to
proceed promptly or otherwise, or by reason of any further obligation or agreement
between any owner of the Property and the then holder of the Note secured thereby
relating to the payment of any sum secured thereby or to any of the other terms,
covenants and conditions contained therein, and Guarantor hereby expressly waives
and surrenders any defense to Guarantor’s liability hereunder based upon any of the
foregoing acts, things, agreements or waivers.
7. Lender shall not be required to give any notice to Guarantor hereunder in order
to preserve or enforce Lender’s rights hereunder (including, without limitation, notice
of any default under or amendment to the Note or other documents evidencing or
securing the loan made thereunder), any such notice being expressly waived by
Guarantor. Upon the occurrence of a default under the Note, or any related document,
and expiration of applicable grace period, Lender is hereby authorized, at any time and
from time to time, without notice to Guarantor or to any other person, any such notice
being hereby expressly waived, to immediately set off, appropriate and apply any and
all deposits (general or special) and any other indebtedness at any time held or owing
by Lender to or for the credit or the account of Guarantor against and on account of
the obligations and liabilities of Guarantor hereunder, except trust or agency accounts.
Notwithstanding any payment or payments hereunder or any such set-off,
appropriation or application, until such time as all amounts owing to Lender have been
paid in full, Guarantor shall not be subrogated to any of the rights of Lender against
Borrower under the Note, or any other Loan document, or as to the security for the
Loan, or entitled to a tender, redelivery or reassignment of the Note, or any other
collateral security given for the Loan.
(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
14
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
as guarantor of a promissory note in existence on the date of his notice to the [bank]
of termination of his contract of guarantee is not affected by that termination because
of the clear and unambiguous terms of the guarantee agreement. Extensions of time
for repayment given the [borrower] by the [bank], also expressly contemplated by the
agreement, are similarly ineffectual to absolve the guarantors of liability. Finally,
utilizing the device of a renewal promissory note simply to evidence such an extension
of time does not change the result.
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:
This guarantee shall secure all liabilities which the Customer may incur or come under
up to and inclusive of the expiration of one month after notice of revocation hereof
shall have been given to the Bank in writing, signed by the undersigned. Provided
always that the undersigned may in any manner aforesaid determine his future liability
15
under this guarantee by notice in writing to be given to the Bank.6
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
6
Significantly, in reaching its conclusion, the Broward Bank court distinguished Miami National Bank on
grounds present here: First, unlike in Miami National Bank, there was no evidence in Broward Bank (and there is no
evidence here) “that the bank reviewed the parties’ financial condition other than at the time of the original loan,”
Broward Bank, 463 So. 2d at 442, a procedure that would have been consistent with the issuance of a new loan as
opposed to a mere renewal; Second, unlike in Miami National Bank, there was no evidence in Broward Bank (and there
is no evidence here) that “the bank removed the [guarantor’s] name from its list of guarantors.” Id.
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opportunity to succeed in its venture. Bellinger would have the Court penalize BB&T for not seeking
a borrower’s default.
Conclusion
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 ORDERED AND ADJUDGED that Plaintiff Branch Banking and
Trust Company’s Amended Motion for Final Summary Judgment with Supporting Memorandum of
Law (DE 196) is GRANTED. Unless the parties can agree to the amount owed by Bellinger pursuant
to the guaranty, that determination will be made at trial.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County, Florida,
this 29th day of April, 2013.
KENNETH A. MARRA
United States District Judge
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