Federal Deposit Ins. Corp. v. Kemp, Civ. A. No. 90-3959.
| Decision Date | 23 May 1991 |
| Docket Number | Civ. A. No. 90-3959. |
| Citation | 766 F. Supp. 511 |
| Parties | FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver for Delta Savings and Loan Association, Resolution Trust Corporation, As Receiver of Delta Savings and Loan Association, F.A. v. Cathy F. KEMP, wife of, Duncan S. Kemp, III, Ferol Fitzmorris Rogers, wife of, Orlin Shorty Rogers, Pat Lee Daye, wife of, Jere M. Daye, Phyllis Breeland George, wife of, Don George. |
| Court | U.S. District Court — Eastern District of Louisiana |
Roy Stuart Lilley, Lilley & Lightfoot, Metairie, La., for Federal Deposit Ins. Corp.
Julie E. Schwartz, Shannon Skelton Holtzman, Liskow & Lewis, New Orleans, La., for Resolution Trust Corp.
Edmond W. Shows, Shows, Cohn & Cali, Baton Rouge, La., for Cathy F. Kemp and Duncan S. Kemp, III, Pat Lee Daye and Jere M. Daye.
Cecil M. Burglass, Jr., Stephen Fitchie Cameron, Law Offices of Cecil M. Burglass, Jr., New Orleans, La., for Ferol Fitzmorris Rogers and Orlin Shorty Rogers.
Peter Scott Michell, New Orleans, La., for Phyllis Breeland George and Don George.
REASONS FOR JUDGMENT1
This matter is before the Court on Motion of Plaintiff, Resolution Trust Corporation as Receiver for Delta Savings and Loan Association, F.A. (hereafter "Receiver") for Summary Judgment against defendants, Cathy F. Kemp, Duncan S. Kemp, III, Pat Lee Daye, Jere M. Daye, Ferol Fitzmorris Rogers, and Phyllis Breeland George in solido for nine sixteenths of the total judgment rendered against Hammond East Development Partnership on March 9, 1990, as amended March 15, 1990, that is judgment against each of the remaining co-guarantors aforementioned in the amount of $608,432.59, plus attorney's fees and costs of collection as provided in the written guarantees executed by each.
Defendant Phyllis Breeland George also filed a Cross-Motion for Summary Judgment against the plaintiff Receiver to dismiss its claim against her as a matter of law.
The matters were scheduled for oral hearing on Wednesday, May 15, 1991, but were submitted on briefs without oral argument.
In June 1985, Delta Savings & Loan Association, Inc. ("Delta") loaned the Hammond East Development Partnership ("Hammond") the sum of $1,050,000.00. Cathy F. Kemp, wife/of and Duncan S. Kemp, III, Pat Lee Daye, wife/of and Jere M. Daye, Ferol Fitzmorris Rogers and Don George executed separate contracts entitled "Continuing Guaranty." Said contracts purport to bind above named guarantors in solido with principal obligor Hammond for indebtedness in the event of default for up to $1,100,000.00 together with interest, fees, and charges of whatsoever nature and kind.2
Contracts of Continuing Guarantee were executed by sixteen individuals on the dates indicated below:
(1) "Continuing Guaranty By: Porter S. Horgan and Lynn Harris Horgan" on June 11, 1985;
(2) "Continuing Guaranty By: Jere M. Daye and Pat Lee Daye" on June 14, 1985;
(3) "Continuing Guaranty By: James J. Gallagher and Judith Pickle Gallagher" on June 14, 1985;
(4) "Continuing Guaranty By: Duncan S. Kemp and Cathy F. Kemp" on June 11, 1985;
(5) "Continuing Guaranty By: Don George and Salvador A. Tallo" partners in a partnership T.G. Ltd., a member of the partnership Hammond East Development on June 7, 1985;
(6) "Continuing Guaranty By: Wm. John Dawson and Bonnie Reaux Dawson" on June 14, 1985;
(7) "Continuing Guaranty By: Orlin Shorty Rogers and Ferol Fitzmorris Rogers" on June 11, 1985; and
(8) "Continuing Guaranty By: Gerald DeRoche and Evelyn DeRoche" on June 7, 1985.3
Yet another contract of "Continuing Guaranty: By Don George" was executed as indicated by Don George as guarantor (i.e. singular) on December 17, 1987.4 This second guaranty executed by Don George, unlike that executed by the Kemps, the Dayes, and the Rogers, refers only to Don George as a sole "guarantor." Neither Phyllis Breeland George his wife at the pertinent time, nor Johyne George from whom he was legally divorced, appeared therein as "guarantors". The provisions of said second guaranty reads consistently throughout guarantor, whereas, in the continuing guarantees executed by the Horgans, the Rogers, the DeRoches, the Kemps, the Dayes, the Gallaghers, and the Dawson's both husband and wife appear therein, sign said agreements and are referred to consistently throughout as guarantors. It is undisputed that the continuing guaranty executed by Don George on December 17, 1987 was not signed by Phyllis Breeland George.
Each of the continuing guarantees provide in pertinent part:
Guarantors5 hereby bind and obligate themselves, their heirs and assigns, in solido with said debtor, for the payment of said indebtedness, precisely as if the same had been contracted and was due or owing by Guarantors individually ....6
On June 11, 1985, in connection with the loan to Hammond, a collateral mortgage note, a pledge of collateral mortgage, and a promissory note was executed by Hammond in favor of Delta in the loan amount, with interest at the rate of 13% per annum. On January 12, 1988, Hammond executed an additional collateral mortgage, collateral mortgage note and an additional pledge as further security on the $1,050,000.00 indebtedness.
Unable to make payments when due on the promissory note, Hammond defaulted on the loan. In the matter entitled "Delta Savings & Loan Association, F.A. v. Hammond East Development Partnership," CA No. 89-3918 c/w 89-3919, 1990 WL 28190 this Court rendered judgment in favor of the Receiver and against Hammond in the principal amount of $806,657.94, plus interest thereafter at a per diem rate of $291.29 until paid, plus attorney's fees of $12,370.25, plus costs. The judgment further recognized the Receiver's collateral mortgages and directed that the mortgaged properties be seized and sold.7
The mortgaged property was then seized and sold for $196,400.00 pursuant to federal Writ of Execution with appraisal and pursuant to ordinary process.8 After deducting the cost of sales and commissions, the judgment was subject to a credit of $191,160.14.
The Judgment of the Court credited amounts received by the Receiver from the releases of certain guarantors, which preceded it. Currently due and owing to the Receiver is $803,935.39, plus costs and interest, due to a credit of $191,160.14. Any remaining guarantors, therefore, would be liable for nine-sixteenths of the full indebtedness (without amounts credited from the releases) which amounts to $608,432.50. This figure has been calculated by adding to the amount of the Court's judgment the credits from released guarantors for a total of $1,081,657.94, and then multiplying by nine-sixteenths, to arrive at a total remaining indebtedness of $608,432.59.
The Receiver has provided figures of debit and credit, that are specific, thorough, fully itemized and documented. Defendants do not dispute that the Receiver's accounting is accurate, rather the dispute centers around the applicable law, for example whether rules of suretyship or the rules of solidarity apply under the undisputed facts.
In 1986 and 1987, Delta executed documents whereby, seven of the sixteen original sixteen guarantors were released.9 On the same day that Delta released Salvador Tallo, one of two partners in T.G., Ltd. along with Don George, Don George appeared and executed a second guarantee on behalf of "himself" as "guarantor" i.e., singular, binding himself in solido for the debts of Hammond.
Thereafter, voluntary personal bankruptcies were filed by the Horgans, Orlin "Shorty" Rogers, and Donald George.10
Thus, the guarantors remaining against whom the Receiver seeks to recover the remaining indebtedness are as follows:
(1) Cathy F. Kemp
(2) Duncan S. Kemp, III
(3) Pat Lee Daye
(4) Jere M. Daye
(5) Ferol Fitzmorris Rogers
Though the Receiver submitted that Phyllis Breeland George is a remaining guarantor, there is no continuing guarantee agreement in evidence substantiating her characterization as such, and for reasons which will appear further on in this opinion and the applicable law, her name has been omitted from the above listing.
Don George and Phyllis George left the State of Louisiana on or about August 1, 1989, disposed of all community property existing between them, presently reside in the State of Massachusetts and Don George filed bankruptcy proceedings in Massachusetts. In short, a community regime between the two is no longer extant. Don George has, as previously mentioned, filed bankruptcy proceedings (Chapter 7) in the Eastern District of the State of Massachusetts, thus rendering himself "judgment proof."
The most recent statement of the Louisiana Supreme Court regarding contracts of continuing guaranty and the law applicable thereto is First National Bank of Crowley v. Green Garden, 387 So.2d 1070, 1073 (La.1980) which held that continuing guarantees are contracts of suretyship.
The issue before the Green Garden court was the effect of the release of one co-guarantor on another co-guarantor's liability, both having executed contracts of continuing guaranty. The Court ultimately held based on contractual provisions essentially identical to the contracts of continuing guaranty at issue in the instant case, that discharge of one surety did not release the other surety's liability for the payment in full of Green Garden's the principal obligor's indebtedness.11
Justice Dixon explained in his concurring opinion that "each guarantor obligates himself for the payment of the indebtedness of Green Garden as if he himself (the guarantor) personally owed the money, making himself a party to the principal obligation and agreeing to pay the bank the full amount of Green Garden's indebtedness, plus interest and fees, upon demand." Id. at 1074.12
The dissenting opinion in Green Garden authored by Justice Calegero cites the Louisiana Supreme Court's earlier precedent in Louisiana Bank and Trust Co. of...
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