Greene v. Bursey, 98-3138.

• Decision Date: 19 May 1999
• Docket Number: No. 98-3138.,98-3138.
• Citation: 733 So.2d 1111
• Parties: Douglas E. GREENE, Appellant, v. David BURSEY, Appellee.
• Court: Florida District Court of Appeals

733 So.2d 1111

Douglas E. GREENE, Appellant, v. David BURSEY, Appellee.

No. 98-3138.

District Court of Appeal of Florida, Fourth District.

May 19, 1999.

Michael J. Keane and Brandon S. Vesely of Keane & Reese, P.A., St. Petersburg, for appellant.

Robert L. Young and Charlotte L. Warren of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Orlando, for appellee.

POLEN, J.

Douglas E. Greene timely appeals from the denial of his motion for rehearing following an adverse final summary judgment entered on David Bursey's complaint which sought payment under a written personal guaranty on a promissory note. Greene argues that fact questions remained with respect to whether Bursey had any legal right to enforce the guaranty, whether part of Bursey's claim was barred by the statute of limitations, and whether such claim was barred by the doctrine of laches. We affirm in part and reverse in part.

Facts

On March 27, 1984, Western World Real Estate, Inc. ("Western World") and Joli Hospitalities, Inc. ("Joli I") entered into a purchase agreement whereby Western World sold the Moorhead (Minnesota) Ramada Inn Hotel ("Hotel") to Joli I. As part of this agreement, Joli I issued a promissory note in the principal amount of $205,000 payable to Western World. The promissory note called for monthly payments to begin on January 1, 1985 and to end on September 30, 1985. The note, however, provided that "[a]t the sole option of the maker, final payment may be extended to March 30, 1987." The note was also personally guaranteed in writing by five of Joli I's principals, including Greene, Joli I's president. The guaranty provides, in pertinent part,

In order to induce Western World Real Estate, Inc., LENDER, to make a loan or loans, renewal or extension thereof, to Joli Hospitalities, Inc., DEBTOR, the undersigned hereby unconditionally guarantees to Lender, its successors, and assigns, the due and punctual payment when due, whether by acceleration or otherwise, in accordance with the terms thereof, of the principal of and interest on all other sums payable, or stated to be payable, with respect to top note of the Debtor, made by the Debtor to Lender dated March 30, 1984, in the principal sum not to exceed ... ($230,000.00) with interest at the rate of eleven percent (11%) per annum.

* * * *

The undersigned waives any notice of the incurring by the Debtor at any time of any of the liabilities, and waives any and all presentment, demand, protest or notice of dishonor, nonpayment or other default.... The undersigned hereby grants to Lender full power, in its uncontrolled discretion and without notice to the undersigned, ...

i. To modify or otherwise change any term of all or any part of the Liabilities..., to grant any extension or renewal thereof ...

* * * *

v. In the event of the nonpayment when due, whether by acceleration or otherwise, of any of the Liabilities, or in the event of default ..., to realize on the collateral or any part thereof,... by foreclosure or otherwise, ... all as Lender in its uncontrolled discretion may deem proper....

* * * *

In case the Debtor shall fail to pay all of the Liabilities when due, whether by acceleration or otherwise, ... the undersigned, immediately upon the written demand of Lender, will pay Lender the amount due and unpaid by the Debtor....

* * * *

The failure of any other person to sign this guaranty shall not release or affect the liability of any signer hereof. (Emphasis supplied.)

On April 2, 1984, Western World assigned its interest in the mortgage and promissory note to Bursey, the husband of Western World's president. The assignment read, in pertinent part:

Western World Real Estate, Inc .... in consideration for the sum of [$205,000]... does hereby sell, assign, transfer, and set over, to said party of the second part, his heirs and assigns, that certain mortgage executed by Joli Hospitalities, Inc., as mortgagor to Western World Real Estate, Inc., as mortgagee ... together with all right and interest in the land therein described, and in the note and obligations therein specified, and as to the debt thereby secured....

In December, 1984, Joli I sold the Hotel to Joli Moorhead Limited Partnership ("Joli II"), a limited partnership which was formed by the March Company. Nevertheless, Joli I maintained the management contract to operate the Hotel.

In January, 1985, Greene sent a registered letter to Western World on behalf of Joli I, exercising the right to extend the final payment date under the promissory note to March 30, 1987.

In December, 1985, the March Company secured an injunction in a Minnesota federal court enjoining Greene and Joli I from participating in the management of the Hotel and Joli II. Thereafter, the March Company entered into an agreement on April 1, 1986, with Bursey to modify the promissory note. This agreement extended the final payment date under the note from March, 1987 to April, 1991. Joli II made its last sporadic payment under the new agreement on March 3, 1987. At some point thereafter, which is not clear from the record, the March Company dissolved.

On April 7, 1995, Bursey sued Greene and others in Palm Beach County, Florida¹, alleging that each of them was personally liable under the written guaranty for Joli II's having defaulted under the promissory note. Bursey alleged he was the present owner and holder of the note, agreement, and guaranty based on his having received same by assignment from Western World on April 2, 1984. Greene raised the affirmative defenses of statute of limitations and laches, among others.

In April, 1998, the court granted Bursey's motion for final summary judgment, awarding Bursey the outstanding principal of $195,000 plus interest, costs, and attorney's fees, for a total sum of $474,809.55. This appeal followed.

Bursey's Right to Enforce the Personal Guaranty

Greene argues that the court erred in granting Bursey summary judgment because fact issues remained as to whether Bursey had any legal right to enforce the personal guaranty against him. We disagree. Western World's assignment of the note and mortgage to Bursey operated as an assignment of the guaranty, even though the assignment contained no specific reference to the guaranty. See 38 Am.Jur.2d Guaranty § 36 (1968)(stating that a guaranty of payment of a bill or note passes with a transfer of the bill or note, whether such guaranty is indorsed on the bill or note or is contained in a separate instrument). As the subject guarantee was premised on the original note and mortgage, and ran unconditionally to Western World, its successors, and assigns, it was a general guaranty. See Rizzi v. Service Dev. Corp., 354 So.2d 898, 899 (Fla. 4th DCA 1978)(holding a guaranty which was for the benefit of the lessor and "his heirs and assigns" was a general guaranty). Because anyone who acts on a general guaranty may enforce it, New Holland, Inc. v. Trunk, 579 So.2d 215, 217 (Fla. 5th DCA 1991) (citation omitted), Bursey, as Western World's assignee of the note and mortgage, was entitled to enforce same against Greene.

Whether Bursey's Claim is Barred By the Statute of Limitations

Greene next argues that a fact question remained as to whether Bursey's claim was barred by the statute of limitations. He maintains that Bursey's cause of action accrued, if at all, in 1987, when Joli II defaulted under the terms of the note, and not in 1991, the final maturity date of the note, as Bursey maintains. It is undisputed that the applicable statute of limitations is section 95.11(2)(b), Florida Statutes (1997), which sets a five-year period for suits involving an action on a contract, obligation, or liability founded on a written instrument, as here. The statute of limitations begins to run from the time the cause of action accrues. § 95.031, Fla. Stat. (1997); Bauld v. J.A. Jones Constr. Co., 357 So.2d 401 (Fla.1978). A cause of action accrues when the last element constituting the cause of action occurs. § 95.031(1), Fla. Stat. (1997). Thus, the key to resolving this point on appeal is to determine whether Bursey filed his lawsuit within five years from the date his cause of action accrued.

The note which Greene guaranteed provided for monthly installment payments though April 1, 1991. Ordinarily, the statute of limitations under an installment contract starts to run on the date each payment becomes due. Isaacs v. Deutsch, 80 So.2d 657, 660 (Fla.1955). As such, the statute of limitations may run on some installments and not others. Central Home Trust Co. of Elizabeth v. Lippincott, 392 So.2d 931, 933 (Fla. 5th DCA 1980)(footnote omitted). Where the installment contract contains an optional acceleration clause, the statute of limitations may commence running earlier on payments not yet due if the holder exercises his right to accelerate the total debt because of a default. Id. (footnote omitted). In other words, the entire debt does not become due on the mere default of payment; rather, it become due when the creditor takes affirmative action to alert the debtor that he has exercised his option to accelerate. United States v. Cardinal, 452 F.Supp. 542, 547 (D.Vt.1978) (citation omitted). This is true even when the note itself, as here, waives notice of demand. Id.

It is undisputed that Bursey never accelerated the note even though, under the terms of the guaranty, he had the option of doing so upon Joli II's default in any given month. Thus, the statute of limitations on the underlying note would not have commenced until it matured on...