RI DEPCO v. Coffey and Martinelli, Ltd.
| Decision Date | 18 April 2003 |
| Docket Number | No. 2000-517-Appeal.,2000-517-Appeal. |
| Citation | 821 A.2d 222 |
| Parties | Rhode Island Depositors Economic Protection Corporation v. Coffey and Martinelli, Ltd. et al. v. Muriel A. Lanfredi. |
| Court | Rhode Island Supreme Court |
Present WILLIAMS, C.J., FLANDERS, and GOLDBERG, JJ., and WEISBERGER, C.J. (Ret.)
Justin T. Shay, Charles S. Beal, Providence, for plaintiff.
John P. Boyajian, J. Richard Ratcliffe, Providence, for defendant.
This case comes before us on an appeal by Muriel A. Lanfredi (Lanfredi or defendant) from the Superior Court order that granted the motion of Rhode Island Depositors' Economic Protection Corporation (DEPCO or plaintiff) to strike the defendant's demand of a trial by jury. The defendant also appeals from the judgment of the Superior Court that extinguished her cross-claim against John E. Martinelli, a co-defendant. She appeals from an implicit determination in respect to the striking of her claim to a jury trial that she is liable as a guarantor on the third note from Coffey and Martinelli, Ltd., to Rhode Island Central Credit Union (RICCU or credit union). We deny and dismiss the appeal from the order striking the defendant's demand for a trial by jury and sustain the defendant's appeal from the dismissal of her cross-claim against Martinelli. The facts and procedural history of the case insofar as pertinent to this appeal are as follows.
On October 10, 1989, RICCU loaned $150,000 to the law firm of Coffey and Martinelli, Ltd. (the Firm). In return for this loan, a promissory note was executed in favor of RICCU. On the same date, RICCU extended a line of credit to the Firm for $200,000. This transaction was memorialized by a promissory note executed by the Firm. On December 12, 1989, RICCU loaned the Firm $50,000 and received from the Firm a promissory note in that amount. The Firm satisfied its obligation on the $200,000 line of credit but defaulted on the first and third promissory notes.
On October 10, 1989, the Firm executed a loan agreement, which provided in part:
"Section 1.04. The Note and all presently existing and hereafter arising indebtedness of the Borrower to the Lender shall be secured by:
(a) Security Agreement;
(b) Guaranty of John G. Coffey, Jr.;
(c) Guaranty of John E. Martinelli;
(d) Guaranty of Muriel A. Lanfredi."
On that same date, John G. Coffey, Jr., John E. Martinelli, and defendant each executed an instrument of guaranty, which provided, in part, as follows:
"Guarantor hereby unconditionally and irrevocably guarantees * * * (iv) the due and punctual performance and observance of all of the other terms, covenants and conditions contained in the Note, the Loan Agreement and any other security instruments and agreements securing the Note on the part of Borrower to be performed or observed."
The promissory notes, the loan agreement, and the documents of guaranty were all drafted by defendant. The first and third promissory notes contained the following language:
"This Note is delivered in and shall be construed by the laws of the State of Rhode Island, and in any litigation in connection with, or enforcement of, this Note or any security given for payment hereof, Obligors and each of them, waive(s) trial by jury and consent(s) and confer(s) personal jurisdiction on courts of theState of Rhode Island or of the Federal Government and agree(s) that service of process may be made on Obligors by mailing a copy of the summons to their address."
The guaranty executed by defendant contains the following provision:
"WHEREAS, Lender has advised Guarantor that it will not enter into the aforesaid loan transaction with Borrower unless, among other matters, all of the obligations of Borrower under the Note and certain other agreements as hereinafter provided, including without limitation the punctual payment of both principal and interest to be paid, are guaranteed by Guarantor * * * [.]"
The document also provides:
After the default on the first and third notes, all assets of RICCU were assigned to DEPCO, which brought an action in the Superior Court for the County of Kent against the Firm and the individual guarantors of the notes, including defendant. In 1996, DEPCO moved for summary judgment on the two notes. The defendant-guarantors, including Lanfredi, in opposing the motion, argued that the guaranty did not extend to the third note, for $50,000, that had been executed on December 12, 1989, but was applicable only to the first and second notes, which both were executed on October 10, 1989. They also argued that DEPCO had conducted a "strict foreclosure" of the Firm's former premises that had the effect of extinguishing the Firm's remaining debt. The motion justice, on May 30, 1996, issued a bench decision in which she denied DEPCO's motion for summary judgment on the ground that there were material factual issues relating to the strict foreclosure defense. She also purported to hold, as a matter of law,that the guarantors' obligations extended to the December loan of $50,000 and that the guaranties incorporated by reference and adopted the terms of the loan agreement. The motion justice did not grant a partial summary judgment, but delivered an oral decision denying DEPCO's motion for summary judgment.1
Thereafter, in September 2000, three motions came before another justice of the Superior Court. These motions were (1) DEPCO's motion to strike Lanfredi's demand for trial by jury, (2) a motion by John E. Martinelli to approve a proposed settlement between him and DEPCO pursuant to G.L. 1956 § 42-116-40 and (3) Lanfredi's motion for summary judgment on her cross-claim for indemnity and contribution against Mr. Martinelli. After oral argument, the second justice granted DEPCO's motion to strike defendant's demand for jury trial, denied the Lanfredi motion for summary judgment, and approved Martinelli's settlement with DEPCO, which had the effect of extinguishing defendant Lanfredi's cross-claim against Martinelli.
The defendant's cross-claim against Martinelli was based upon an agreement executed by Messrs. Coffey and Martinelli and the law firm when Lanfredi withdrew as a member of the Firm in April 1991 (the withdrawal agreement). This withdrawal agreement provided that the Firm and its individual members would indemnify Lanfredi for any amount awarded to RICCU, its successors or assigns, that exceeded 33 percent of the outstanding balance of principal and interest owed to RICCU. DEPCO was the successor in interest to RICCU.
To support her appeal, defendant raises three issues. These issues will be considered in the order of their significance to this opinion. Further facts will be supplied as needed to deal with these issues.
The defendant argues that the first justice erred in holding that her guaranty extended to the third note, for $50,000, which was executed in December 1989. She contends that her guaranty related only to the first and second notes, which were executed on October 10, 1989. DEPCO contends that defendant Lanfredi cannot challenge this holding of the first motion justice in 1996 on the ground that the time for appeal from this ruling has long passed. DEPCO's contention on this issue is without merit because the only order issued by the first justice was a denial of DEPCO's motion for summary judgment. Such an order is interlocutory and may not be reviewed by appeal as of right. McKinnon v. Rhode Island Hospital Trust National Bank, 713 A.2d 245, 247 (R.I.1998). However, this "ruling" was in effect confirmed by the second motion justice when she struck the demand for jury trial in respect to the third note, declaring it to be the law of the case.2 It is undisputed that the appeal from the orders of the second motion justice was timely. Consequently, this issue is properly before the Court at this time.
We are of the opinion that the second justice was correct in extending the guaranty to the third note because the guaranty document contained a provision that bound the guarantor to abide by the terms of the loan agreement. The loan agreement provided that "[T]he Note and all presently existing and hereafter arising indebtedness of the Borrower to the Lender shall be secured by * * * (d) Guaranty of Muriel A. Lanfredi." (Emphasis added.) We conclude that thislanguage is clear and unequivocal and relates to any indebtedness that may thereafter be incurred by the Firm in favor of RICCU. We have held that unless the terms of a written contract are ambiguous, it should be interpreted as a matter of law in accordance with its plain terms. Clark-Fitzpatrick, Inc./Franki Foundation Co. v. Gill, 652 A.2d 440, 443 (R.I.1994). We also have held, in Rotelli v. Cantanzaro, 686 A.2d 91, 94 (R.I.1996), that instruments executed in the course of a single transaction at the same time and to accomplish the same purpose should be read and construed together.
Construing the document of guaranty together with the loan agreement, it appears that the guaranty extended to hereafter arising indebtedness. There was no limitation to this term and therefore the argument that the hereafter arising indebtedness related only to the second line of credit note is unpersuasive. If there were any ambiguity in this statement (and we believe there is not), it should be construed against the draft person, who was defendant Lanfredi, Fryzel v. Domestic Credit Corp., 120 R.I. 92, 98, 385 A.2d 663, 666-67 (1978); A.C. Beals Co. v. Rhode Island Hospital, 110 R.I. 275, 287, 292 A.2d 865, 872 (1972), as well as the maker of the...
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