Chahadeh v. Jacinto Med. Grp., P.A.

• Decision Date: 14 March 2017
• Docket Number: NO. 01-16-00347-CV,01-16-00347-CV
• Citation: 519 S.W.3d 242
• Parties: Hassan CHAHADEH, M.D., Appellant v. JACINTO MEDICAL GROUP, P.A. and Paradise Marketing and Consulting, L.P., Appellees
• Court: Texas Court of Appeals

519 S.W.3d 242

Hassan CHAHADEH, M.D., Appellant

v.JACINTO MEDICAL GROUP, P.A. and Paradise Marketing and Consulting, L.P., Appellees

NO. 01-16-00347-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued March 14, 2017

Rehearing Overruled April 20, 2017

Andrew Parma, BARRY CONGE HARRIS L.L.P., 1800 West Loop South, 750, Houston, TX 77027, for Appellant.

Christopher M. Odell, Amanda S. Thomson, ARNOLD & PORTER LLP, 700 Louisiana Street, Suite 1600, Houston, TX 77002, for Appellee.

Panel consists of Justices Keyes, Bland, and Huddle.

OPINION

Rebeca Huddle, Justice

Hassan Chahadeh, M.D., personally guaranteed loans made by Jacinto Medical Group, P.A. and Paradise Marketing and Consulting, L.P. to University General Health System Inc. and University General Hospital, L.P. (collectively "UGH"). Subsequently, UGH defaulted on the loans and filed for Chapter 11 bankruptcy protection. Appellees sent notice and demand to Chahadeh requesting payment under the guaranty agreements, but Chahadeh did not pay. Appellees sued Chahadeh for breach of the guaranty agreements and filed a traditional summary-judgment motion, which the trial court granted.

In his sole issue on appeal, Chahadeh argues that the trial court erred by granting summary judgment because the bankruptcy court has exclusive jurisdiction over appellees' claims against him and the summary-judgment evidence did not conclusively establish the amount of his liability. We affirm.

Background

The promissory notes & guaranty agreements

Chahadeh is the CEO of University General Health System Inc. and the Chairman of University General Hospital, LP. In February 2014, Jacinto loaned University General Health System Inc. $1,400,000 under the terms of a promissory note. At the same time, Paradise made two loans to University General Hospital, L.P.—one in the amount of $360,000 and one in the amount of $457,979.81—under the terms of two corresponding promissory notes.

The dispute in this case centers on two guaranty agreements that Chahadeh executed personally guaranteeing the three promissory notes. One guaranteed payment of the Jacinto promissory note, and the other guaranteed payment of the two Paradise promissory notes. In both guaranty agreements, Chahadeh agreed to pay any amounts due under the promissory notes if UGH¹ defaulted on them:

In the event of default by [UGH] in payment or performance of the Guaranteed Indebtedness, or any part thereof ... [Chahadeh] shall promptly pay the amount due hereunder ... within two (2) business days after notice and demand."

The agreements provided that they were guarantees of payment, not collection:

This instrument shall be an absolute, continuing, irrevocable, and unconditional guaranty of payment and performance, and not a guaranty of collection....

They also provided that Chahadeh could not assert a setoff or reduction defense to a demand for payment:

No setoff, counterclaim, recoupment, reduction, or diminution of any obligation, or any defense of any kind or nature which [UGH] may have against Lender or any other party, or which Guarantor may have against [UGH], Lender, or any other party, shall be available to, or shall be asserted by, Guarantor against Lender ... or against payment of the Guaranteed Indebtedness or any part thereof.

In addition, Chahadeh agreed that his obligation would not be diminished if UGH declared bankruptcy:

Guarantor hereby agrees that its obligations under this Guaranty Agreement shall not be released, discharged, diminished, impaired, reduced, or affected for any reason or by the occurrence of any event, including ... any disability of [UGH], or the dissolution, insolvency, or bankruptcy of [UGH].

UGH declares bankruptcy

In February 2015, UGH and affiliated companies filed a voluntary petition seeking Chapter 11 bankruptcy protection. Appellees filed claims in the bankruptcy proceeding for the amounts UGH owed them under the three promissory notes and other agreements. Appellees later sent notice and demand to Chahadeh for payment under the guaranty agreements, but he refused to pay.

The underlying lawsuit

Appellees sued Chahadeh for breach of the two guaranty agreements. After discovery, appellees moved for summary judgment and supported the motion with evidence, including copies of the three promissory notes, the two guaranty agreements, the demand letter, and Chahadeh's responses to their requests for admission. They also submitted the affidavit of Siraj Jiwani, the Chief Executive Officer of Jacinto and the Vice President of Paradise, who averred that UGH defaulted on the promissory notes, payment under the guaranty agreements was demanded from Chahadeh, and he had not paid. Jiwani's affidavit also set forth the total unpaid guaranteed indebtedness owed by Chahadeh under each of the two guaranty agreements and the amount of interest accruing on each per day. Chahadeh responded and argued that summary judgment was improper because the bankruptcy court had exclusive jurisdiction over appellees' claims against him. The trial court granted summary judgment. Chahadeh appealed.

Discussion

Chahadeh argues that the trial court lacked jurisdiction because appellees' filing of a proof of claim in the bankruptcy court vested that court with exclusive jurisdiction over their claims against him. Chahadeh also contends that the trial court erred in granting summary judgment in appellees' favor because appellees' summary-judgment evidence regarding damages was self-contradictory and therefore did not conclusively establish the amount of his liability.

A. Standard of Review

"We review a trial court's summary judgment de novo." Travelers Ins. Co. v. Joachim , 315 S.W.3d 860, 862 (Tex. 2010). "We review the evidence presented in the motion and response in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not." Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex. 2009).

When reviewing a summary judgment, we must (1) take as true all evidence favorable to the nonmovant and (2) indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Id. In a traditional summary-judgment motion, the movant has the burden to show that no genuine issue of material fact exists and that the trial court should grant judgment as a matter of law. TEX. R. CIV. P. 166a(a), (c) ; KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp. , 988 S.W.2d 746, 748 (Tex. 1999). If the movant meets its summary-judgment burden, the burden shifts to the nonmovant, who bears the burden to raise a genuine issue of material fact precluding summary judgment. Lujan v. Navistar Fin. Corp. , 433 S.W.3d 699, 704 (Tex. App.—Houston [1st Dist.] 2014, no pet).

B. Applicable Law

A guaranty is a promise to a creditor by a third party to pay a debt on behalf of a principal in the event that the principal defaults on the original obligation. See Republic Nat'l Bank of Dallas v. Nw. Nat'l Bank of Fort Worth , 578 S.W.2d 109, 114 (Tex. 1978). To support a claim for breach of a guaranty, a party must show proof of (1) the existence and ownership of a guaranty contract; (2) the terms of the underlying contract by the holder; (3) the occurrence of the conditions upon which liability is based; and (4) the failure or refusal to perform by the guarantor. Lee v. Martin Marietta Materials Sw., Ltd. , 141 S.W.3d 719, 720 (Tex. App.—San Antonio 2004, no pet.).

"The law recognizes two distinct types of guaranty: a guaranty of collection (or conditional guaranty) and a guaranty of payment (or unconditional guaranty)." Cox v. Lerman , 949 S.W.2d 527, 530 (Tex. App.—Houston [14th Dist.] 1997, no pet.) (first citing Universal Metals & Mach., Inc. v. Bohart , 539 S.W.2d 874, 877 (Tex. 1976) ; then citing United States v. Vahlco Corp. , 800 F.2d 462, 465 (5th Cir. 1986) ; then citing Ford v. Darwin , 767 S.W.2d 851, 854 (Tex. App.—Dallas 1989, writ denied) ). A guaranty of collection is an undertaking of the guarantor to pay if the debt cannot be collected from the primary obligor by the use of reasonable diligence, and requires the lender to pursue the principal debtor before collecting. Id. In contrast, a guaranty of payment is an obligation to pay the debt when due if the debtor does not and requires no condition precedent to its enforcement against the guarantor other than a default by the principal debtor. Id. Unlike a guarantor of collection, a "guarantor of payment is primarily liable and waives any requirement that the holder of the note take action against the maker as a condition precedent to his liability on the guaranty." Id. (citing Hopkins v. First Nat'l Bank at Brownsville , 551 S.W.2d 343, 345 (Tex. 1977) (per curiam)). "A guarantor of payment is thus akin to a co-maker in that the holder of the note can enforce it against either party." Id. (citing Reece v. First State Bank , 566 S.W.2d 296, 297 (Tex. 1978) ).

The terms of a guaranty agreement determine whether the guaranty is a guaranty of collection or of payment. See Berry v. Encore Bank , No. 01-14-00246-CV, 2015 WL 3485970, at *2, *5 (Tex. App.—Houston [1st Dist.] June 2, 2015, pet. denied) (mem. op.) (citing Yamin v. Conn, L.P. , No. 14-10-00597-CV, 2011 WL 4031218, at *6 (Tex. App.—Houston [14th Dist.] Sept. 13, 2011, no pet.) (mem. op.)). When construing a guaranty agreement, our primary goal is to ascertain and give effect to the parties' intent. Id. (first citing Coker v. Coker , 650 S.W.2d 391, 393 (Tex. 1983) ; then citing Hasty v. Keller HCP Partners, L.P. , 260 S.W.3d 666, 670 (Tex. App.—Dallas 2008, no pet.) ). Where the language is clear and unambiguous, the best guide to the parties' intent is the language of the guaranty. Id. (first citing Univ. Sav. Ass'n v. Miller , 786 S.W.2d 461, 462–63 (Tex. App.—Houston [14th Dist.] 1990, writ denied) ; then citing Sw. Sav. Ass'n v. Dunagan , 392 S.W.2d...