Biel Loanco III–A, LLC v. Labry

• Citation: 862 F.Supp.2d 766
• Decision Date: 24 May 2012
• Docket Number: No. 09–2518–STA–dkv.,09–2518–STA–dkv.
• Parties: BIEL LOANCO III–A, LLC, Plaintiff, v. Edward A. LABRY, III, William B. Benton, Jr., and J. Kevin Adams, Defendant.
• Court: U.S. District Court — Western District of Tennessee

862 F.Supp.2d 766

BIEL LOANCO III–A, LLC, Plaintiff,

v.Edward A. LABRY, III, William B. Benton, Jr., and J. Kevin Adams, Defendant.

No. 09–2518–STA–dkv.

United States District Court,

W.D. Tennessee,

Western Division.

March 23, 2012.

Order Denying Reconsideration May 24, 2012.

Henry C. Shelton, III, James Bennett Fox, Jr., Adams and Reese, LLP, Memphis, TN, for Plaintiff.

Michael C. McLaren, Daniel Warren Van Horn, Butler Snow O'Mara Stevens & Cannada, PLLC, Memphis, TN, for Defendant.

ORDER GRANTING PLAINTIFF'S SECOND MOTION FOR SUMMARY JUDGMENT

S. THOMAS ANDERSON, District Judge.

Before the Court is Plaintiff's Second Motion for Summary Judgment (D.E. # 44), filed on July 27, 2011. Defendants Edward A. Labry, III (“Labry”), William B. Benton, Jr. (“Benton”) and J. Kevin Adams (“Adams”) (collectively “Defendants”) filed their Memorandum in Oppositionto Plaintiff's Motion for Summary Judgment on September 12, 2011. (D.E. # 47.) Plaintiff filed a Reply Memorandum on September 30, 2011. (D.E. # 50.) For the reasons set forth below, Plaintiff's Second Motion for Summary Judgment is GRANTED.

BACKGROUND

On August 12, 2009, Plaintiff filed a Complaint against Defendants asking this Court to enforce collection of the indebtedness due Plaintiff under four commercial mortgage notes (the “Four Notes”) and various limited continuing guaranties (the “Guaranties”) executed by Defendants. (Compl. ¶ 7.) In the Complaint, Plaintiff sought a judgment against Labry, Benton, and Adams in the principle amount of $1,116,000.00, plus, jointly and severally with all other Defendants, one hundred percent (100%) of all interest, costs, and reasonable attorneys' fees. ( Id. at 8.) Plaintiff filed its first Motion for Summary Judgment on May 11, 2010 (D.E. # 15–16.) After the parties filed a response, reply, and sur-reply, the Court entered an order denying Plaintiff's Motion on March 29, 2011, 2011 WL 1211606. (D.E. # 33.)

The Court held a hearing on the parties' Motion to Continue Trial (D.E. # 52) on February 28, 2012. At that hearing, the Court discussed Plaintiff's Second Motion for Summary Judgment. Plaintiff indicated that it had intended to include documents related to an additional lawsuit in Florida (“the Florida Lawsuit”) in its Second Motion. In light of this revelation, the Court granted Plaintiff ten days to file supplemental briefing so that Plaintiff would have ample opportunity to present the Court with all of the information it would need for its decision. Plaintiff did so on March 9, 2012. (D.E. # 56.) Similarly, the Court gave Defendants ten days to respond to Plaintiff's supplemental briefing.

Although the Court denied Plaintiff's First Motion for Summary Judgment, the Court interpreted the Guaranties and found that “full payment” under them included “thirty percent (30%) of all of the ‘Obligations' (the liabilities of Borrower to Bank, interest, attorneys' fees, expenses of collection and costs) and thirty percent (30%) of the attorneys' fees, expenses of collection, and costs owed by Guarantor for the enforcement of the Guaranties.” (Order, D.E. # 33, at 21.) The Court further noted that “if the provisions of the Guaranties are not met, liability may be apportioned jointly and severally between Labry, Benton, and Adams for the full payment of the Obligations at the discretion of Plaintiff.” ( Id. at 22.) Similarly, the Court interpreted the limitation clause to apply to interests, costs, and reasonable attorneys' fees, meaning that “Plaintiff may recover no more than thirty percent (30%) of all interest, attorneys' fees, expenses of collection, and costs.” Therefore, if the provisions of the Guaranties were not met, Defendants would be jointly and severally liable for thirty percent (30%) of all interest, attorneys' fees, expenses of collection, and costs. ( Id.) Under the law of the case, this interpretation will control the Court's evaluation of Plaintiff's Second Motion for Summary Judgment.

The following facts are undisputed for purposes of this Motion unless otherwise noted. Plaintiff is the owner and holder of the Four Notes, which are outstanding as of June 17, 2008. (Pl.'s Statement of Facts ¶ 1.) Plaintiff asserts that Defendants “jointly and severally guaranteed the Four Notes such that they are jointly and severally liable for thirty percent (30%) of the principal amount of obligations outstanding under the Four Notes as of June 17, 2008, plus interest, attorneys' fees, and other fees and charges.” ( Id. ¶ 2.) Defendants note that while they did execute the Guaranties, reproduced in pertinent part below, they are not liable for any funds, as they raise affirmative defenses which they believe will block Plaintiff from recovering any sums from them. (Defs.' Resp. to Pl.'s Statement of Facts ¶ 1–2.)

Different limited liability companies (“LLCs”) executed each of the Four Notes. (Pl.'s Statement of Facts ¶ 3.) These LLCs include AB7G, LLC (“AB7G”), AB8G, LLC (“AB8G”), AB9G, LLC (“AB9G”), and AB10G (“AB10G”) (collectively “the Borrower Entities”). ( Id.) The Borrower Entities are all Florida LLCs domiciled in and engaging in business in the state of Florida. ( Id. ¶ 4.)

Below is a description of each of the Four Notes: ¹

Note 1

To evidence a loan of $1,080,000.00, AB7G executed a Promissory Note dated October 24, 2005, in the original principal amount of $1,080,000.00, payable to the order of Whitney, as modified by that certain Change in Terms Agreement, dated October 24, 2006, executed by AB7G, in the original principal amount of $1,080,000.00, payable to the order of Whitney, as further modified by that certain Change in Terms Agreement, dated January 24, 2007, executed by AB7G, in the original principal amount of $1,080,000.00, payable to the order of Whitney, as further modified by that certain Changed in Terms Agreement, dated January 24, 2008, executed by AB7G, in the original amount of $1,080,000.00, payable to the order of Whitney. ( Id. ¶ 5.)

Note 2

To evidence a loan of $800,000.00, AB8G executed a Promissory Note dated October 24, 2005, in the original principal amount of $800,000.00, payable to the order of Whitney, as modified by that certain Change in Terms Agreement, dated October 24, 2006, executed by AB8G, in the original principal amount of $800,000.00, payable to the order of Whitney, as further modified by that certain Change in Terms Agreement, dated January 24, 2007, executed by AB8G, in the original principal amount of $720,000.00, payable to the order of Whitney, as further modified by that certain Changed in Terms Agreement, dated January 24, 2008, executed by AB8G, in the original amount of $720,000.00, payable to the order of Whitney. ( Id. ¶ 6.)

Note 3

To evidence a loan of $800,000.00 AB9G executed a Promissory Note dated October 24, 2005, in the original principal amount of $800,000.00, payable to the order of Whitney, as modified by that certain Change in Terms Agreement, dated October 24, 2006, executed by AB9G, in the original principal amount of $800,000.00, payable to the order of Whitney, as further modified by that certain Change in Terms Agreement, dated January 24, 2007, executed by AB9G, in the original principal amount of $720,000.00, payable to the order of Whitney, as further modified by that certain Changed in Terms Agreement, dated January 24, 2008, executed by AB9G, in the original amount of $720,000.00, payable to the order of Whitney. ( Id. ¶ 7.)

Note 4

To evidence a loan of $1,200,000.00 AB10G executed a Promissory Note dated October 24, 2005, in the original principal amount of $1,200,000.00, payable to the order of Whitney, as modified by that certain Change in Terms Agreement, dated October 24, 2006, executed by AB10G, in the original principal amount of $1,200,000.00, payable to the order of Whitney, as further modified by that certain Change in Terms Agreement, dated January 24, 2007, executed by AB10G, in the original principal amount of $1,200,000.00, payable to the order of Whitney, as further modified by that certain Changed in Terms Agreement, dated January 24, 2008, executed by AB10G, in the original amount of $1,200,000.00, payable to the order of Whitney. ( Id. ¶ 8.)

The Borrower Entities respectively breached certain terms and conditions of Note 1, Note 2, Note 3, and Note 4 when they failed to make the required payments respectively due upon maturity of the Four Notes. ( Id. ¶ 9.) To date, the indebtedness under the Four Notes has not been paid in full. ( Id. ¶ 10.) Defendants are included in this matter as a result of the Guaranties they each executed with respect to the Four Notes. ( Id. ¶ 11.)

Plaintiff states that Labry “jointly and severally guaranteed thirty percent (30%) of the obligations of Note # 1, Note # 2, Note # 3, and Note # 4, outstanding as of June 17, 2008 ... when he executed a Limited Continuing Guaranty for each of the Four Notes, all with effective dates of October 17, 2005 [ (collectively “the Labry Guaranties”) ][.]” ( Id. ¶ 12.)

Likewise, Plaintiff states that Benton “jointly and severally guaranteed thirty percent (30%) of the obligations of Note # 1, Note # 2, Note # 3, and Note # 4, outstanding as of June 17, 2008 ... when he executed a Limited Continuing Guaranty for each of the Four Notes, all with effective dates of October 17, 2005 [ (collectively “the Benton Guaranties”) ][.]” ( Id. ¶ 13.)

And, lastly, Plaintiff states that Adams “jointly and severally guaranteed thirty percent (30%) of the obligations of Note # 1, Note # 2, Note # 3, and Note # 4, outstanding as of June 17, 2008, plus one hundred percent (100%) of all interest, attorneys' fees, and other fees and charges when he executed a Limited Continuing Guaranty for each of the Four Notes, all with effective dates of October 17, 2005 [ (collectively “the Adams Guaranties”) ] [.]” ( Id. ¶ 14.) ²

To each of these statements, Defendants admit that they each executed the Guaranties. However, Defendants again deny that Labry, Benton, and Adams...