LBCMT 2007-C3 Valley Retail, LLC v. Sheppard et al

Filing 40

MEMORANDUM OPINION. Signed by District Judge Glen E. Conrad on 8/6/2013. (lab)

CLERKS OFFI u.S.DI COURT
CE
ST.
ATROANOKE,VA
FI
LED

I TH E UN I
N
TED STA TES D I I COU RT
STR CT
FOR THE W ESTERN DI
STRI OF VI NI
CT
RGI A
ROAN OK E D I I ON
V SI

AUC 25 2 1
03
JULI
A

n:
v
LBCM T 2007- V A LLEY RETA I LLC,
C3
L,
Pl ntf ,
ai i f

UDL

,

CL
LR

7 CERK
Y Loo

Ci lA c i N o. 1
vi ton
7: 2CV 001
79
M EM O M N DU M O PI IO N
N

ERI D .SH EPPA RD
C

By: on.G l n E.Conr d
H
e
a
Chi Unie Stt sDititJ
ef t d a e src udge

and
PH I P W O LM AN ,
LI
D ef
endant
s.

LBCM T 2007 C3 V a l y Re a l LLC t l d t sdi r iy a ton a i tEr c D . ppa d
le
t i,
i e hi ve st c i ga ns i She r

a Phii W ol n t r c rda esf br ac ofal n g r nt a r e e . The c ei
nd lp
ma o e ove mag or e h
oa ua a y g e m nt
as s

p e e tyb fr tec u t nt epanifsmo infrs mmayj d me t F rt er a o ta
r sn l e o e h o r o h litf' to o u r u g n . o h e s ns h t
f l , he m oto w ilbe g an e ast la lt a de e ast da age .
olow t
in l
r t d o i biiy nd ni d o m s
B ackzround

Shep r a W ol n aema gesofW SG Roa
pad nd ma r na r
noke,L. (C SG Ro
P.ûW
anoke', of
' one
)
s ve a e iiss tupby t de e nt f t de l pm e ofr t ls pi c nt r t oughou
e r l ntte e
he f nda s or he ve o nt eai hop ng e e s hr
t

t Comm o
he
nweat ofVigi a. OnJ y 1 200 W SG Roa
1h
r ni
ul 2, 7,
nokeobt i d a$2, 000. l n
ane
390, 00 oa
f om Le an Br t r Ba FSB f t de l e ofa r t i st i Roanoke Vi gi a The
r
hm
o he s nk,
or he ve opm nt
e a l ie n
, r ni .

l nwa e de dbyapr mis ynot (t e' a s urdbyaDe ofTr t Fi ur Fii
oa s vi nce
o sor e ( ' nd ec e
Not )
ed
us, xt e lng
a Se urt Agreme (k e ofTr fl,a welanAddii lColaealAsi ntofLe es
nd c iy e nt k d
De
us s l
tona ltr sgnme
as
a Re s(dk ntAsinme )a a As i ntofMa ge ntAgr me andSubo di ton
nd nt i e
l
sg nf' nd n sgnme
na me
ee nt
r nai
ofM a ge ntFee Cd a ge ntAgre ntAsinme ' .
na me
s M na me
e me
sg nt'
)

Unde t t r oft Not W SG Roa
r he e ms he e,
nokewa r quiedt makel npa e t on t
se r o
oa ym n s he

ee nhda ofe c mont ( ea jj 1i & 2()) Anç nto Deaul'oc uredSfa
lve t y a h
h. Not t () a .
i
Eve f f t' c r t ny
i
pa ntrquie i ghe Not prort t M aurt Daeg s no pado t d t whe due.
yme e r d n t l e i o he t iy t wa j t i n he ae n '
'
(-, tj3. Upo t oc ure ofa Eve ofDea tt lnd wa a ho ie t t c ran
J1a )
1
n he c rnce n nt
ful,he e er s ut rz d o ake e ti

aci ,i l ngde lrngt e ieunpadd ti dit yd a pa bl (d.
tons ncudi cai he ntr
i eb mme ael ue nd ya e. 1 )
U nde t t m s oft Re As i e ,W SG Roa
r he er
he nt s gnm nt
noke a s g d t r gh t colec r nt
s i ne he i t o l t e

pa me sfom ist nt t t l r ( tAsi nta j1. ) Thea sg ntwas
y nt r t ena s o he ende. Ren sgnme t 1.
sinme

s be t oarv c bel e s , c al we W SG Ro n k t c le trn pa me t u tl h
u j c t e o a l i n e whih lo d
c
a o e o o lc e t y n s n it e
occ rnceofa Eve ofDeaul. (d.a jj2.,3. ) Upont o tre eofa Eve of
ure
n nt
f t 1 t 1 1.
he cclrnc n nt
D e a t t bor ow e ' lce et r i t d a om a i a l a t r gh t cole tr pa e s
f ul, he r r s i ns e m na e ut tc ly, nd he i t o l c ent ym nt

rvet t t lnde . (d. tj3..
e red o he e r I a 1)
The M a gem e A g ee en A s i
na
nt r m t s gmne a s c ai d a pr vi i a i a e t t
nt l o ont ne
o s on pplc bl o he
c l c i ofr ntpaym e s f l i a Even ofD e a t Spe ii aly,W SG Roa
ole ton e
nt olow ng n
t
f ul.
c fc l
noke a e d
gr e
t td i s h pe i a a Eve ofD e aul ... a e s ... a t o i ofLe r
ha d ng uc r ods s n
dur
nt
f t m y xi t , t he pton
nde

execs bywrte notcet Borowe a Age lj... 1rnt,s cu iyde is is ,
ried
itn i o r r nd nt, a1 e s e rt post,sues
pr e a pr isoft Pr ry c l cedby Ag nt a trpay e ofa lc t a e ns sof
oce ds nd oft he ope t ole t
e , fe
m nt l oss nd xpe e

opeai t Pr ry (ncudi wihou lmiai opeai e ns s ra ett txe ,
rtng he ope t i l ng, t t i tton, rtng xpe e , e l sae a s

i urnc prmi a rpaisa mantna lp s lbea i i ac r anc wih Le rs
ns a e e ums nd e r nd i e nce g) hal ppled n co d e t nde '
wrte die ins.... ( a e ntAgr me Asi nta j6.
itn rcto
' M nag me
'
ee nt sgnme t )
Cont m por neo l w ih t s g ng oft N ot ,as i e a ee e s a ot rl n
e
a us y t he i ni
he e s gnm nt gr m nt , nd he oa
docum ent Sheppar and W ol an execut a G uar y ofRecour OblgatonsofBor ower
s,
d
m
ed
ant
se i i
r

(t rnt ',purua t whiht ' bs ut ya unc tonal 'g rnte thepr
C a y'
Gua
) s nt o c hey i ol el nd ondii ly' uaa e d é ompt
a
t
a unc tonalpa
nd ondii
ymentoft Gua a e Re ureOblgai ofBorowe ( r na t
he r nted co s
i tons
r r heei fer

d fn d . ( aa t a 1) Asrlv n i t eisa tc s ,heC aa te Re o re
eie l' Gu rn y t .
'
ee a tn h n tn a e t ' rn e d c u s
Gu
Oblga i ofBor ow e ' i l d ta a al Los es ... m pos d upon ori ur ed by or
i tons
r r' nc ude ' ny nd l s
i
e
nc r
a s re a i tLe rand die ty ori r c l a i i outofori c
s e t d ga ns nde
rcl
ndie ty r sng
n onne ton w ih ...
ci
t

Bo
nrwersm ia ia i ormia oprai n of... nt r e v by Bonrwera t t
' s pplc ton
s ppr i to
Re s ec i ed
fer he

oc urenc ofa Eve ofDea t' (d. TheGuaa ya ot rdoc
c r e n nt
ful. L=)
'
rnt nd he umense de i a
t vi ncng nd
s urng t l w e e uli a e y as i
ec i he oan r tm t l sgned t t pl i if
o he a ntf .
l 201 She r i r d a
n
0, ppa d nqui e boutr i nc ng t de a s a ed wih one oft
efna i he bt s oci t
t
he
c m e c a pr ri . A c or ng t t def nda s a r pr e a i f t pl n ifad s d
om r i l ope tes
c di o he e nt , e es nt tve or he ai tf vi e
Sheppa d t tno s ngl l n c d be r fna e t ta loft l ns i t porf i ha t be
r ha
i e oa oul
e i nc d, ha l he oa n he tolo d o

r i nc d t et r a t tr fna i dic so cou d notpr ee t i aborowe ha
efna e og he , nd ha e i ncng s us ins l
oc d mtl
r r d
m i s d l n pa e s f s x y da . Folo i t s c
s e oa ym nt or i t ys
l w ng hi onve s to W SG Roa ke s op d
r a i n,
no t pe
m aki paym ent on t N ot
ng
s he e.

On Ocobe 28,201 LNR Pa t r,LLC (i ',hes ca s l c roft l n,snt
t r
0,
rnes
1
LNR' t pe il ewie he oa e
)
W SG Ro
anokeaNotc o De aul. TheNotcei c t t tW SG Roa kew a in de a t
ie f f t
i ndi aed ha
no
s d f ul
i
unde t Not a ot Loa Doc
r he e nd her n
umen sby vit of a ong o he t ngs isf iur t pa a1
t
rue , m
t r hi , t a l e o y l

amount whe duet runde ' ( i ofDea ta 1) Neal sxmont ltr onAprl21,
s n
hee n' Notce
ful t .
ry i
hs ae,
i
2011, a ntf s c
pl i if ouns ls ntW SG Roa ke a D e a Le t r a N o i ofA c e e a i w hi h
e e
no
m nd te nd tce
c l r ton, c
sa e i pe tne pa t a f l s
t t d, n ri nt r , s olow :
By l te da ed Oc obe 28,201 t Se i rnotfe Bor ow e ofisdef ul
e tr t
t r
0, he N ce
iid
r r t
a t
unde t t r s oft Loan Doc e sa l Bo r w e f ie t pa t a o s
r he e m
he
um nt fer r o r a l d o y he m unt
due unde t not a t ot rLoa Doc e s ora m o hl pa e ss nc
r he e nd he he
n
um nt , ny nt y ym nt i e
t tda e. Bor ow e i i de a tpu s ntt t t r soft N o e and t D e of
ha t
r r s n f ul r ua o he e m
he t
he ed
Tnz t a t sl te i t a s you t tt N ot hol rdoe he e a e e a et
s , nd hi e t r s o dvi e
ha he e de
s r by cc l r t he

M atrt Dae( dei di t Not)a i ditl de
tziy t as tne n he e nd mme aey mandspa ntoft
yme
he
balnced unde t Not a a1a
a ue r he e nd 1 mount dueunde a1t a oft ot rLoa
s
z 1 or nyl he he n
D ocum ent ....
s

Thi de a a a e e a i l te s l al o s r e asnotc t tt de a tt de
s m nd nd cc l r ton e t r ha l s e v
i e ha he f ul m r
t N ot a D e d ofTr tf r f l r t pa t a ount due u ert N ot a
he e nd e
us o aiu e o y he m
s
nd he
e nd
D e d ofTnz t and t ot r i e com pl w ih t t r soft Loa Docu e s
e
s,
o he w s
y t he e m
he n
m nt

(ole tvel t iEve ofDea f',as c tttdadefulunde t
c lci y,he k nt
ful ) lo onsiue
a t r he
A s i en ofRe s t Rec s Gua a y, he Pa e G ua a y a a ot r
s gnm t
nt , he
our e
r nt t
ym nt r nt nd ny he
Loa Doc e s The Eve ofD e a tr s t i t au om atc t r i ton of
n
um nt .
nt
f ul e uled n he t
i e m na i

Borowe ' lce et c lc t Re t ( defne i t Asi ntofRens
r rs i ns o ole t he ns as i d n he sgnme
t)
u rt Asi ntofRe s AnyRe sc lcte byBonowe afe t
nde he sgnme
nt.
nt ole gdj
r tr he
Eve ofDeful aet be(ndt ha be n)hedi tus f t be ftoft
nt
a t r o a o ve e l n r t or he nei he
N ot hol r a s ul ha bee a now m us be pa d t t N ot hol r wihi
e de nd ho d ve n nd
t
i o he
e de t n

o ( )busne sda a t rc ptbyBorower
ne 1 i s y fer e ei
r .
You a ehe e die t dt i me ael pa a ls h n mt t t Not hol era
r r by r c e o m di t y y l uc mot s o he e d nd
t c i t pa a Re sorot rr ve
o ontnue o y ny nt
he e nuesr ce ved fom t Pr r y t t
e i
r he ope t o he
N ot de . I a to you a e r quie t r i t t N ot hol r a lt na
ehol r n ddii n,
r e r d o em t o he e de 1 e nt
s urt de is gi n t Bo r e unde a1 e s i l a e . The l m nior
ec iy post ve o r ow r
r 1 xitng e s s
nde t
s lbe pe s ly la e f rBor ower sf iu et t n o rt s curt de ist
hal
r ona l i bl o
r
' a l r o ur ve he e iy post o
t N o e de a a l s s i ur e by t N o e d r a a r s tofBor ow e '
he t hol r nd ny os e nc r d
he t hol e s e ul
r rs
f iur t eihe a y t Re sa r ven st t ope a i e ns s oft
a l e o t r ppl he nt nd e ue o he r tng xpe e
he

Pr ry(ndt pr rya oun f t smet Le r orpa s hamount t
opet a o opel cc t or he a o nde) y uc
so
Le r The N ot hol r r s r s a 1o is o he r g sa r m edi s a ns t
nde .
e de e e ve l f t t r i ht nd e
e gai t he
Borowe a t I m nior
r r nd he nde t .

( ma Letra 2)(
De nd te t emphassomit )
i ted .
W SG Roa
noke s e nty f l t pa t ba anc due unde t N ot . Co eq nty,
ubs que l aied o y he l e
r he
e
ns ue l
a f r c os e s e w asc
o e l ur al
onduct d o J 1 2011 a w hi h t pl ntf pur ha e t Roa
e n une 5,
, t c he ai i f c s d he
noke
r t i st
e a l ie.
The pl ntf fl t i t nta t o aga ns She r a W ol an on A pr l1 201
ai i f ied he ns a c i n i t ppa d nd
m
i 8, 2.
Thepl i ifc ai st tW SG Roa
a ntf l m ha
noke i pr r y w ihhel r pa e sf l ng t i s nce
m ope l t d ent ym nt olowi he s ua
oft N otce ofDef ul,a t tSheppa d a W ol a a e la e f s h pa e sunde t
he i
a t nd ha
r nd
m n r i bl or uc ym nt
r he
Gua a y.
r nt

Thecaei pr e l beor t c to t pli ifsmotonf s
s s esnty f e he our n he antf
i or ummayj
r udgme .
nt
The m ot on has been f l bref and i rpe f r ew .
i
uly i ed
s i or evi l

'Neihersi r
t
de equesed a hearng on t m oton.
t
i
he i
4

St
andard ofR evi w
e

Ana r o s mmayj d me tsa p o raelftemo a ts o t a t r i n
wa d f u r u g n i p r p it l h v n h ws h thee s o
i
g n n ds u ea t a maeilfc a dt emo a ti e t ldt j d me ta amatro lw.
e uie ip t s o ny tra a t n h v n s ni e o u g n s te f a '
t
'
Fe R. v. 56() I dee ni whehe t grntamoi f s
d. Ci P. a. n tnni ng t r o a
ton or ummayj me ,hec t
r udg ntt our
m us vi w t r c d i t lg m os f a e t t non- ova s Ande s v. be t Lobby.
t e he e or n he i ht t avor bl o he
m nt .
r on Li rv

l c, 7 U. 2 2 2 5( 98 ) Towi sa das mmayj d me tmo in teno mo a t
n .4 7 S. 4 , 5 1 6 .
t tn u r u g n to ,h n- v n s
h
mus pr uc s fcinte de efom whih ar as bl fnde off c co d r t n a ve diti
t od e ufi e vi nc r
c e ona e i r a t ul eur
r c n

t i f vo . J.a 248. S l or ors ultvealeg tonsdonots fc ,nordoesaC r
her a r -s t
p
k
concus y pec ai l ai
ufie
mee

s i il ofe de e'i s
cntla vi nc n uppor ofghenon- nt' c s ' Thomps v. t
t t
mova sj a e.
'
on PoomacEl .
ec Powe
r
Co.31 F. 645,649( h Ci.200 ( i Philpsv. Trns ,I ,1 F. 285,
, 2 3d
4t r 2) quotng li CSX a p. nc. 90 3d
287
( h Ci.1 9.
4t r 999(
D icussi
s
on

Be a s t ec u ts u idcini b s do tedvest ofh p rist ec u t p le t e
c u e h o r' j rs ito s a e n h i riy te a t ,h o r a p is h
e
c c of1 w r esofV igi a t f m s a e. Se K l xo Co. St nt El c. f Co. 31
hoi e a ul
r ni , he onz t t
e a n
v. e or e M g. , 3

U. 48 496- ( 941. ' r ni l loksfvorbl uponc c of1w ca esi aconrc,
S. 7, 97 1 ) t gi a aw o a a y
vi
hoie a lus n
ta t
gi ngt m f lefe te e i unus lcic tnc s' Hia hiCr tAm .Co p. Si ne
vi he ul f c xc pt n
ua r umsa e .
' tc
edi
r v. g t

Bmz 1 F. 61 62 ( hCi.1 ) l t sc e t patesagee t tt Guaa ywoul
k, 66 3d 4, 4 4t r 999 . n hi as,he ri r d ha he rnt
d
be gove ne by t 1 w oft s at w he e t c m e c a pr pe t i l at d. Be aus t
r d
he a
he t e
r he om r i l o r y s oc e
c e he
pr ry i l a e i V i g ni t c t ila y V igi a s bs a tve 1 w i isr vi w oft
ope t s oc t d n r i a, he our w l ppl r ni u t n i a n t e e
he
pl i i f sc a m a t a fr a i de e e r i e by t de e nt .
a ntf ' l i nd he f im tve f ns s a s d
he f nda s
1.

The Pl nt f ' Pri a Faci C as
ai i f s m
e
e

UnderV i ni l ,a guar y i tan i
rgi a aw
ant s t ndependentcont act by w hi t guar or
r ,
ch he
ant
undert ,i w rtng,upon a s fci underaki t be answer e f t debt orf t
akes n ii
uf i ent
t ng, o
abl or he
, or he

pe f m a e ofs e dut i ca e oft f iur ofs e o he pe s w ho i prm a iy la e t
r or nc
om
y, n s
he a l e om t r r on
s i rl i bl o

pa crpe f m.' M c mal v. tlEntr.I ,547S. 2d204,207( 2001 (nt na
y ) ror '
Dt d Na' es. nc.
E.
Va. ) i er l
cttonsomitd) I a acint e oreag rnt apli ifma e tbls aprmafci
iai
te . n n to o nf c uaa y, antf y sa ih i a e
e ilmentt rco r byde
ntte
o e vey
monsrtng: 1 t e se eando rhi oft g r nt ( t
tai ( ) he xitnc
wne s p he ua a y;2) he

tr oft prmayoblgain;( dea tont oblgai byt prmayoblgor a (
ems he i r i to 3) ful he i ton he i r i ; nd 4)
nonpa ntoft a
yme
he mountdueunde t g rnt c ta t Se Jr he uaa y onrc. e -s
#
A.

The Exi t nc a O w ne hi oft G uar
s e e nd
rs p
he
anw

l t sc e, he e i no diput ast fr tel m e oft pl ntf ' prm a f c e c e. The
n hi as t r s
s e he i s e nt he ai if s i a i as
pl i ifha s it a co oft Gua a y on w hi h isc a m i bas a t def nda sha
a ntf s ubm ted
py he
r nt
c t l i s ed, nd he e nt ve
a it t tt y exe ut d t Gua a t A ddii ly, ti undi put t ta 1oft l n
dm ted ha he
c e he
r n y.
tona l i s
s ed ha l he oa
doc e t ,i l ng t Gua a y,w e e as i d t t pl i i f
um n s nc udi he
r nt
r s gne o he a ntf .
B.

The Term s oft Pri arv O bluat ons and D ef ton t O blaat ons
he m
i i
aul
he
i i
bv t Debt
he
or

The pl ntf hasal o es abls t t m soft prm ar oblgatonsand t bol wer s
ai if
s t i hed he er
he i y i i
he w
'
def t. The pl ntf hassubm it a copy oft N ot execut by W SG Roanoke,asw el ast
aul
ai if
ted
he e
ed
l he

Re A s i e . U nde t t m s oft N o e, n Eve ofD e a toc ur w he Sa pa e
nt s gnm nt
r he er
he t a
nt
f ul c s
n s ny ym nt

r quiedi (he Not prort t M aurt Dae i notpadont daewhe d .' ( ea j3.
e r n t j e i o he t iy ts s
i he t n ue' Nbt t )
I i undi put t tW SG Roa ke f ie t m a m ont y l n pa e son m or t n one
ts
s ed ha
no a l d o ke
hl oa ym nt
e ha

occ soni 201 Se 4/ 1 She r De l a !5;Defnda s Br i Opp' a 8
a i n 0. e 2/3 ppad c. t
e nt' .n
nt
( knowldgi t tW SG Roa ked sldjs vea mont ypa nt'. I i lke s
ac
e ng ha
no t se e rl hl yme s' t s i wie
mi
)
undi put d t tt sr s t i t i s nc ofaN o i ofDef ul a a Dem a Le t ra N otce
s e ha hi e uled n he s ua e
tce
a t nd
nd te nd
i

ofAc elrton. Se Deenda s Ans ra ! 1 (dmitngt tW SG Roa r ei dt
c eai
e f nt' we t 0 a ti ha
noke ec ve he
NotceofDea ta t tt Noietpe ksfrisl ';J.a !1 (dmitngt tW SG Roa ke
i
ful nd ha he tc t a o tef) ;. t 3 a ti ha
s
s
no
r c i dt De ndLetra Notc ofAc elrtona t tt doc ntç pe ksfris l '.
e eve he ma
te nd ie
c eai nd ha he ume t a o tef)
s
6

Thus i i cl a f om t r c d t tW SG Ro
, t s e r r he e or ha
anokede a t d o ispa e oblga i nsunde t
f ule n t ym nt i to
r he
N ot .2
e

U pon t oc ur e e o a Eve ofD ef t t pl i tf r ai t r g t pos e st
he c r nc f n
nt
aul, he a n if eg ned he i ht o s s he
l n pay e scolec ed by W SG Roa
oa
m nt l t
noke. U nde t M a
r he nage e Agr e e tA s i nm e ,
m nt e m n s g nt
W SG R oa
noke w a pe m it t pa pr r y- e a e e ns f om t c l c e r ntpa e t .
s r ted o y ope t r l t d xpe es r he ole t d e
ym n s
H ow e ,i w a r qui e t r m i t r m ai roft r ntpa e st t pl i if
ver t s e r d o e t he e nde
he e
ym nt o he a ntf .
A cc di t t evi nc s it d by t pl i if i l ng a s o n de l r ton,W SG
or ng o he de e ubm te
he a ntf , nc udi
w r caai
R oa
nokeha notr m it d a r ntpa m e st t pl i ifsnc t N otc ofD e a tw a i s d,
s
e te ny e
y nt o he a ntf i e he i e
f ul s s ue
eve t
n houg t t t la ountofr ntpa e se ee t a ou ofpr t r l t e ns st
h he o a m
e
ym nt xc ds he m nt
opery- e a ed xpe e o
w hi t pa m e scoul ha be n a i d. Alhough t def nda scl i ,i t i br e i
ch he y nt
d ve e pple
t
he e nt a m n he r i f n

o p iin,û a (h )Bo r we dd,n fc,o wadrnst g e Le d r't edee d n sd n t
p osto th t t e ro r i i a tf r r e t o t l n e , h fn a t o o
t
h
'
cieo ofe a e de t s
t r fr ny vi nce o uppor t sc l or ase ton. ( e nt'Br i Opp' a 7.
thi oncus y sri
Defnda s .n
nt )
l t abs nc ofs h e de e, he co t nc udest tno g nui i s ofm a e i lf c e ssas
n he e e uc vi nc t
ur co l
ha
e ne s ue
t r a a t xi t
t t sel m e toft pl n if s prm a f c e c s Se La Enf ce e Ali e ofA m . I v.
o hi e n
he ai t f ' i a i a e. e w
or m nt lanc
, nc.

USA Diec.nc,61F. x822,826( hCi.
r tl .
App'
4t r 2003)(s de epr snt i oppostont a
t
Evi nc e e ed n
ii o
moinf rs
to o ummayj me ... tbepr tve, tmeel c o a ea c nno bemeey
r udg nt mus
obai no r y olr bl nd a t
rl
co l or saeme s... t s cfce de ir s
ncus y tt nt wihout pe ii vi ntay uppor.'(ntr lciaina quoai
t' i ena tto nd tton
)
maksomitd)
r
te .
2 Rat t an di putng t f t W SG Roa
her h
s i he act hat
nokef l t m ake payment wihi t tme
aied o
s t n he i
r r undert N ot t def ndant t is w ih t wor ng oft N otc ofDef t The
equied
he e, he e
s ake s ue t he di
he i e
aul.
def
endant e phaszet t N otce t ovi no de al r di t ...pur t nons m
i hat he i ç
pr des
t is egar ng he
pored
paym ent' s h
,' uc
ast he nat eoft m i e paym ent t da esoramount oft e m is pa e s,oreven how m a
û
t
ur
he ss d
s, he t
s hes s ed ym nt
ny

p yme t weemis d. ( fnd n s Br i Op na 5) S h ciiim, owe r i wih tme i. As
a n s r s e ' Dee a t' .n p' t . uc rtcs h ve , s tou rt
'
t pl ntf not i isr y bref t occ r
he ai if es n t epl i , he urenceofan Eve ofDef ul doesnott n on t amountor
nt
a t
ur
he
numberofm is pa e s. l t a sngl misedpaym e consiut a EventofDef tunde t
s ed ym nt nsead, i e s
nt
tt es n
aul
r he
Not
e.

N onpavm ent oft A m ountD ue f
he
rom t G uarant under t G uarant
he
or
he
v
Cont
ract

U pon de a tng on isl a pa e s W SG Roa
f uli
t o n ym nt ,
noke w a r i e t r m i t t pl i if
s equ r d o e t o he a ntf
t r m a nderoft r n pa e sc l c e f om t nt a t rpa ng pr r y- e a ed e ns s
he e i
he e t ym nt ole t d r ena s f e yi
ope t r l t xpe e .
W he W SG Roa
n
noke f ied t s nd t e pa e st t pl i if i ti r d t de e n s
a l o e hes ym nt o he a ntf , t r gge e he f nda t '

la lt u rt Gua a y. W hiet pa tesdiag eea t t pr c s a o owe by t
ibiiy nde he r nt
l he ri s r s o he e i e m unt d he
def nda s i i undi put t tt de e n s ha notm a a pa e st t pl i tf t
e nt , t s
s ed ha he f nda t ve
de ny ym nt o he a n if o
s ts y t s de .
a i f hi bt

Bas o t f e i t c ur c l st tt pli ifha m a aprma f c e
ed n he or go ng, he o t onc ude ha he a ntf s de i a i

s o n t a i i e t ldt s
h wig h t t s ni e o ummayj g n o iscam u d rteGuaa t
t
r ud me t n t li n e h
rny.
Il.

The Guarant
ors'D ef
ensesto R ecovery

l t i a w e t t co pl i ,t de e nt a s r t f low i af im a i de e e :
n he r ns r o he m a nt he f nda s s e t he o l ng f r tve f ns s
w a ve ,e t
i r s oppel a br ac oft i ple c na tofgood f ih a f i de i
, nd e h he m i d ove n
a t nd a r alng. Fort
he
f l i r ons t c t nc ude t te c oft as ere de e e f isasa m a t rofl w .
olow ng eas , he our co l s ha a h he s t d f ns s a l
te
a 3
A.

W ai
ver

The d e e ofw a ve i defne a ç i e i lr lnqui hm e o a known rght' See
ef ns
i r s i d s t nt ntona e i s nt f
an
i .
'

Stnlv' Caftra.l v.Abr ms n,306S. 2d 8 873( .1 . Thi dee er q rs
a e s ee i nc.
a o
E. 70,
Va 983)
s fns e uie

pr t tt pli if( )ha knowldgeoft f t ba i t t e r ieoft rg ,a ( t
oof ha he antf 1 d
e
he acs sc o he xe cs he iht nd 2) he
i entt r lnq s t r g . Se Em pl s Com m e c a U ni l .Co.ofAm .v.Gr tA m .
nt o e i uih he i ht
e
oyer
r i l on ns
ea

l . ,200 S. 2d 5 56 ( 1 . Ast pa tesrl ngona aleg wave ,he
ns Co.
E. 60, 2 Va. 973)
he ri eyi
n l ed i r t
de e nt be rt bur n ofpr ng s h wave by Ccea , e i ea uneq voc le de e.
f nda s a he de
ovi uc
i r dl r pr c s nd
ui a vi nc '
'

Utc M ut l .Co.v. tlI
ia ual ns
Na ' ndemnivCo.17 S. 2d855,858( .1 .
t , 3 E.
Va 970)
3 l lghtoft cour' r lngs t c tne notr h t is ofcola e alesoppelr s byt
ni
he
ts u i , he our ed
eac he s ue
lt r t
aied he
pl ntf i r aton t t bankr cy c ' deci on i l r W SG Dules L. ,12-111 201 Bankr.
ai if n el i o he
upt ourts si n n e
l , P.
49, 3

LEXI 3 ( n r E. Va J n. 201 .
S 4 Ba k . D. . a 4, 3)

Thes prnc pl ,a i i t i t c e, m pe t co uson t tt de e
e i i es ppled n he nsant as co l he ncl i ha he f ndant'
s
w a ve def ns i una ii
i r e e s va lng. The de e nt 'brefi oppos ton t t pl i if s m oton
f nda s i n
ii o he a ntf
i
pr de no di c s on oft sde e e a co a nsno aleg tonsw hi h w oul s
ovi s
s us i
hi f ns , nd nt i
l ai
c
d uppo t he no i
rt
ton
t tt pl ntf know i y a i e i ly w a ve isrghtt r cov r unde t Gua a y.
ha he ai i f
ngl nd nt ntona l i d t i o e e
r he
r nt
M or ove , he Gua a y expr s l pr dest ti m a bew a ve çonl by a a e m e i w rtng
e rt
r nt
e sy ovi ha t y
i dk y
n gr e nt n ii

sgnedbyt pa t a i twhom e or me ofa ... i ...ss
i
he ry gans
nf ce nt ny waver i ought' ( rnt a 4.
. Guaa y t )
'
U nde V igi a l w , tuc c a esm us begi n efec . Chas H .
r r ni a C h l us
s
t
ve f t'
'
. Tom pki Co. Lum ber e
ns v.
m ns

M utCa . , F.
. s Co.732 Supp.1 1 ( D. 1 (ii Che a a & PoomacTe. v.
368, 377 E. Va. 990) ctng s pe ke t
lCo.
Sis & Ryan.nc.362S. 2d723,730( 1 ),seas Tr Co. Exxonmobi OiCop .
son
l ,
E.
Va. 987 ) e lo ex v.
.
l l
,

234F.Su 2c572,581( D.Va.
pp. 1
E.
2002)( di t taclus r rnga wai rt bei
hol ng ha a e equii ny ve o n
w rtng w ase or ea e unde V igi a 1 a t , ha t def nda c d notr l on aw ai r
ii
nf c bl
r r ni aw nd, hus t t he e nt oul
ey
ve

def ea e am itnwave sgnedbyt pl ntf). Asnos hm itnwave ha be n
ens bs nt te i r i
he ai it
uc te i r s e
alege i a s ison b t defnda s t co tc l est tt de e eofw ave
l d n ny ubm s i y he e nt, he ur oncud ha he f ns
i r

pr de noba t s
ovi s
r o ummayj
z udgme i t i tntc s
ntn he nsa a e,
B.

E quiabl Est
t e oppel

The de e
f ndant ne a gue t tt pl i ifi ba r d f om r ove i u rt Gua a y,
s xt r
ha he a ntf s r e r ec rng nde he
r nt
bec us W SG Roa
a e
noke r led on r pr s nt tons m adeby t pl ntf t ti ed isde a t
ei
e e e ai
he ai i f ha nduc t f ul.
Spe fc l t de e nt a l ge t tShe r w a t d by t pl i if sr pr e a i t t
cii aly, he f nda s le ha
ppa d s ol
he a ntf e es nt tve ha
r fna i di c s onsc d notpr e untlt bonpwe ha m i s d pay e sf s xt days
e i nc ng s us i
oul
oc ed i he
r d se
m nt or i y
,
a t tW SG Roa
nd ha
noke s o d m a ng pa m e sbas d on t s c nve s ton.
t ppe
ki
y nt
e
hi o r a i
The Supr e Cour ofV igi a has defned t doct ne ofequiabl esoppelasdt
em
t
r ni
s
he
ri
t e t
ûhe

c e ncewor dbyopeai oflw whihe j nsonewhos acin o i to hasi e
ons que
ke
rton a
c n oi
e to r nacin
nduc d
r i e by a t r fom be ii f om a c nge i hi poston a t ex ns oft o he .
elanc
no he r
neftng r
ha
n s ii t he pe e he t r'
'
9

Empl r Comme calUni I .Co.200 S. 2d a 562,s ea s N uimes PLC v. a d,955
oye s
ri
on ns ,
E. t . e lo l s
W r

F. 875,8 ( hCi.1 (t t eesoppeli de i dt pr e ta a rar whoma
2d
99 4t r 992) t
Equiabl t
s sgne o otc ny dves y
y

bep eu ie bygl atmp e c a g o p st n.) Th d tie srq ie n sa et p cfc
rj dc d a' te td h n e f o ii ' . e ocrn ' e urme t r t e ii
l
)
o '
s
a rgor .' Andes v.Cox,977F. p. 3, ( . Va 1 . kl elme s
nd i ous'
ron
Sup 41 417 W D. . 997) k- e nt
-he

ne esayt etbls e tbl et la e( )arprs ntton,( r la e,()c ngeof
c s r o sa ih quia e soppe r 1 e e e ai 2) einc 3 ha
poston, nd( derme ,a t pa t whor i uponet
ii a 4) ti nt nd he ry
eles
soppelmus pr ea helme by
t ove c e nt
cl a , e i e,a une i a e de ' Pr nc sA nne H il Ci lLe
e r pr c s nd qu voc l vi nce.
' i es
ls vi aMue v.Sus n Co t nt
a
ns a

Re lEsaeTrlt 41 S, 2d599,603( .1 )
a tt t , 3 E.
s
Va 992 .
A ppl ng t e pr nc pl s t co tc l
yi hes i i e , he ur onc udest tt a s re def ns ofes o li
ha he s e t d e e
t ppe s
w ihoutm e i. Eve i a age oft pl i ifm ade t r pr s nt tons s m m a i ed abt e t
t
rt
n f n nt he a ntf
he e e e a i
u
rz
w , he
def nda s s i s o a e de d ofa alega i s t c e t es a i h a c nge ofposton
e nt ' ubm s i ns r voi
ny l tons ufi i nt o t bls
ha
ii
by t pl ntf . W hie t def nda ss es t tShe r w asnotadvi e t tm i s d
he ai if
l he e nt ugg t ha
ppa d
s d ha s e
paym e sw oul c tt e e n s ofde a t t de e n sha a no poi a l ge t tt
nt
d ons iut ve t
f ul, he f nda t ve t
nt le d ha he
pl i ifr pr e e t tm i s ng pa e sw oul notr ul i de aul or o he wi e ti r
a ntf e es nt d ha s i
ym nt
d
es t n f t t r s r gge
oblga i unde t l n doc e s Li w i e t de e nt ha notalege a f c swhi h
i tons
r he oa
um nt . ke s , he f nda s ve
l d ny a t
c
s
ugge tt t pl i if of e e t w a ve t t r s oft N ot w hi h e e s y pr bi or l
s hat he a ntf f r d o i he e m
he e, c xpr s l ohi t a

modiiai . Se Noea j9(s- sNot ma notbemodiid, me
fc tons e t t dl
-hi e y
fe a nded, i d,c nge
wave ha d,
di c r ed o t r i t d or l orby a a to f iur t a ton t par ofBol w e orLende ,
s ha g r e m na e aly
ny c r a l e o c
he t
w r
r
butonl by a a ee e i wr tng s gne by t pa t a i twhom e o c m e ofa
y
n gr m nt n ii i d
he ry ga ns
nf r e nt ny

modii ai a ndmentwave ,e e i c
tc ton, me
, i r xtnson, hange dic r o tr nai i s ht' .
, s ha ge r emi ton s oug ,)
'
A ddii l and per
tonaly,
hapsm os i port l t Supr e CourtofV i ni hasm ade i
tm
anty, he
em
rgi a
t

ce rt t Gkl a a tont e orea i pe ntc tac ofguaany,heg antfli
la ha,ûin n ci o nf c n nde nde onr t
r t t pli it s
pr
oceedi on t guar y,noton t underl ng not ' M cD onal 547 S. 2d at207. By t
ng he
ant
he
yi
e.'
d,
E.
he
10

Gua a y' own t r ,whih t de e nt ha r c ni e s a f rt m s ves t
r nt s
e ms
c he f nda s ve e og z d pe k o he el , he
def nda sag e d t bela e f a1 l s si ur e by t lnde a ii outofori c
e nt r e o i bl or l os e nc r d he e r rsng
n onnec in
to
w ih t bor ow e ' m i a i t o o m i a o i ton ofr ntpa e sc l t d afe t
t he r r s s pplca i n r s ppr pr a i
e
ym nt olec e t r he

oc r nc ofa Eve ofDef ul. Thede enda s' i to unde t Gua a yl ea s l
cure e n nt
a t
f nt oblgai ns
r he
r nt t nd ha l
ar
be a ol e unde a a a lc r um s a es w ihoutr ga d t t va i t r ul r t or
bs ut
r ny nd 1 ic t nc , t
e r o he ldiy, eg a iy
e o c a lt oft N ot ,t Sec r t I t u e ,ort ot Loa D oc e s' a d ontnue
nf r e biiy he
e he u iy ns r m nt he her n
um nt , nd t i
'
c
i f lf ce a ef e ta t a m odii ton .. oft N ot , he Se urt l tum e t o a oft
n ul or nd f c s o ny
fca i
. he e t
c iy ns r n , r ny he

ot Loa Doc nt. ( r t a 1 3. I t a e ofa al tons
her n ume s' Guaany t , ) n he bsnce ny legai uggesi t tt
'
tng ha he
pl i ifc nge isposton w ih r s c t t de e nt 'oblga i unde t Gua a y, he
a ntf ha d t
ii
t e pe t o he f nda s i tons
r he
r nt t

de e eofe tbl et
f ns quia e soppelprvi snoba t s
o de
r o ummayj me i t sca e See e. ,U.
r udg nt n hi s . , a, S.

Ba k. v Ho f n 4 9F. p' 3 2 3 3( 1hCi. 1 )(ee tn ted fn a tscam
n NA . fma , 0 Ap x 0 , 0 1 t r 20 1 rj cig h ee d n ' li
t tt ba s d be eq t bl e t
ha he nk houl
uia y s oppe f om enf r ng a gua ant ag ee en be us t
d r
o ci
r y r m t ca e he
ba sa t o a m i s a e e sa l e y c r bu e t t de a toft l n, he e t
nk' c i ns nd s t t m nt leg dl onti t d o he f ul he oa w r he
de enda f ied t s
f
nt a l o how C
l a a tor sa e entm ad by U . Ba i i ons s e w ih is
how ny c
tt m
e
S. nk s nc it nt t t

i t cli s e ngpa ntunde t g anya e me '.
nsant am e ki yme
r he uar t gre nt'
)
C.

Breach oft Im pled Covenant ofG ood Fai h and Fai D ealnc
he
i
t
r
i

I t i fna a fr a i de e e t de e nt cl i t tt y s d notbe hel la e
n he r i l f im tve f ns , he f nda s a m ha he houl
d i bl
unde t Gua a y bec us t pl ntf br c is i ple dut ofgood f ih a f i dea i
r he
r nt
a e he ai i f ea hed t m i d y
a t nd a r lng.

UnderVigi a lw,e y c r c i ude a i id cove ntofgo f ih a f i deai
r ni a ver onta t ncl s n mple
na
od at nd ar lng.

SeeW ol v. nni M a No.11241 201 U. App.LEXI 4300,a *20( hCi. b.
f Fa e e,
- 9, 3 S.
S
t
4t r Fe 28,
201 ( tngEno ov. c Ad nt es Lt , F. pp. 443,450( D. 2009);Va.
3) cii
mot Spa e ve ur . d.624 Su 2d
E. Va.
)

Vemiult Lt v. . Gr e& Co.1 F. 535,5 - ( h Ci.1 . Howe r i
r c ie, d. W R. ac
, 56 3d
4142 4t r 988)
ve ,'
no
i ple dut a i esw ih r s c t a i t g r d by e es c t a t t r s ' Skil t m s
m i d y rs
t e pe t o d viy ove ne
xpr s on r c ual e m .
'
ls or

l .v.El toni DaaSyse .LLC,666F.Supp. 61 620( D.Va.2009)(ii W ad'
nc
ecr c t tms
2d 0, E.
ctng r s
Equi ,I v. w Hola N. ,493S. 2d51 520( 1 ). Thus ç npa test a
pv nc. Ne
lnd Am.
E. 6, Va. 997)
,û
whe ri o
co r c c ea e va i a bi i r g s a i ple c na ofgood f ih a f i dea i i
nt a t r t ld nd nd ng i ht , n m i d ove nt
a t nd a r lng s
i pplc bl t t er ght , atd cours wilnotus t i ple cove ntas t S c e f
na i a e o hos i s' z
'
t l
e he m i d
na
he i
vehi l or

r wrtng a u mbi uousc nta ti or rt c e t dute t tdo no ot r s e s.' W a d'
e ii n na g
o r c n de o r a e i s ha
t he wie xit'
r s
Egui ,I ,
p. nc. 493 S. 2d a 520. As e ai d by t U nie St t s Co tofAppea sf t
E. t
xpl ne
he t d a e ur
l or he
Fourh Ci c t t lhough t du y ofgo f ih d notpr ve a pa t f om e r i i is
t r ui, k t
a
he t
od a t oes
e nt ry r
xe c s ng t

e i tcon r c ua rg s apa t ma note r ie c nta t ldic ei n i ba f t e n when
xplci ta t l iht, ry y
xe c s o r c ua s r to n d aih, ve
s h di c e i i ves e s el i t tpa t ' V a. e m i ult .Lt ,1 F. a 542.
uc s r ton s t d ol y n ha ry.
'
V r c ie d. 56 3d t
l t s c s ,t t r soft Gua a y s gne by t de e nt e e s y pr de t tt
n hi a e he e m
he
r nt i d
he f nda s xpr s l ovi ha he
de e nt w il per o ly la e f a a a l os e i ur e by t l nde i c
f nda s l be s na l i bl or ny nd 1 l s s nc r d he e r n onne ton w ih
ci
t
t bo r w er sm i a i a i orm i a opra i ofr ntpa e s r c ve afe t oc ur e e
he r o ' s pplc ton
s ppr i ton e
ym nt e ei d t r he c r nc
ofa Eve ofD e aul. The e i s m pl no e r i e ofdi c e i i ve a t i ple
n
nt
f t
r s i y
xe c s
s r ton nvol d, nd he m i d
c
ovena ofgood f ih a f i de lng c nnotbe us d t ale t de e ant 'e es c r t
nt
a t nd a r a i a
e o t r he f nd s xpr s ontac ual
oblga i . Se LBCM T 2007- W .Br d St e t LLC v. ppa d,N o. 1 cv- ,2013
i tons
e
C3
oa r e ,
She r
3: 2- 295

U. Dit LEXI 65088, t*1 ( 7,20l (ee tngShe r a W ol n' afr tve
S. s.
S
a 5 May
3) rj ci
ppad nd ma s fimai
dee eofbr a hoft i i c na ofg f t a f rde i ;
fns
e c he mpled ove nt ood aih nd ai alng) LBCM T 2007C3
Stri RealLLC, 11 c 470,201 U. Dit LEXI 69 a *15( D. M a 1
elnc ti,
No. :2-v3 S. s.
S 913, t
E. Va. y 5,
201 (a .
3) sme)
H a ng c l
vi onc uded t te c oft def nda s af im a i de e esf isa am a t rofl w ,
ha a h he e nt ' fr tve f ns a l s
te
a

t c t lgrntt plitf smotonfrs
he our wil a he anif
i o ummayj
r udgme ast la lt
nt o ibiiy.

1
2

111.

D am aaes

The pl i i f s e t r c
a ntf s e k o e overt r ntpa e scolec ed by W SG Roa
he e
ym nt l t
noke d z i t
lr ng he
e g - ont pe i be w e n t i s nc oft N o i e ofD e a ta t f e os e s l ,m i
i ht m h rod t e he s ua e he tc
f ul nd he or cl ur a e nus
pr r y- e a e e ns i ur e by W SG R o no
ope t r l t d xpe es nc r d
a ke. U pon r e oft e de e s m it d by
evi w
he vi nc ub te
t pari s t co tc l est ta g nui di pu e ofm a e i lf c e s sa t t n ountow e
he te , he ur onc ud ha e ne s t
t r a a t xi t s o he m
d

by t de e t , Alhought pl itf cl mst tW SG Roa
he f ndan s
t
he an if ai ha
noke r e ve $1 , 00 i
ec i d 71037. n
r nt li ome fom Ocobe 28,2010t J 1 2011 t de e nt ha pr
e a nc
r
t r
o une 5,
, he f nda s ve oduce e de e
d vi nc

i c tngt tW SG Ro
ndi a i ha
anokeo yr eve $l 5 73 i r nt i om edurngt ttmepe i
nl ec i d 05,69. n e al nc
i ha i
rod.
A ddii ly, he a ountofpr pe t r a ed e ns i t 'd by W SG Roa
tona l t m
o ry- el t xpe es nc m e
noke durng t ttm e
i ha i
pe i i i di put l lgh oft e f t lc lc s t c r m us de t pl i if s m oton
rod s n s e. n i t hes ac ua onf i t , he ou t t ny he a ntf '
i

f rs mmayj d me twi r s e tt d ma e .
o u r u g n t ep c o a g s
h
Conc us on
l i

Fort r s sae t pli ifsmoto f s
he eaons ttd,he antf
in or ummayj
r udgme twilbegrntdast
n l
a e o
la lt a de ed a t da a s
i biiy nd ni s o m ge .
The Cl r i di e t t s nd c r ii c e oft sm e or ndum o ni n and t
e k s r c ed o e e tted opi s hi m a
pi o
he
a co pa ng or rt al co e ofr c d.
c m nyi
de o l uns l e or

?V
EN TER :Thi 4- da ofAug t 201
s
y
us , 3.

Chi U nied St esD i ti Judge
ef t
at
sr ct

13