Regions Bank v. Collier
| Decision Date | 18 September 2014 |
| Docket Number | NO. 1:12-CV-00262-DMB-DAS,1:12-CV-00262-DMB-DAS |
| Parties | REGIONS BANK PLAINTIFF v. GREGORY W. COLLIER; and KENNETH WINDHAM DEFENDANTS |
| Court | U.S. District Court — Northern District of Mississippi |
This is an action brought by Plaintiff Regions Bank to enforce the terms of commercial guaranty agreements executed by Defendants Gregory W. Collier and Kenneth Windham. Before the Court is Regions Bank's motion for summary judgment. Doc. #39. For the reasons below, the motion is granted.
"Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law." Norwegian Bulk Transport A/S v. Int'l Marine Terminals P'ship, 520 F.3d 409, 411 (5th Cir. 2008) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986)). To award summary judgment, "[a] court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Id. at 411-12 (internal quotation marks omitted). To this end, "[t]he moving party bears the burden of establishing that there are no genuine issues of material fact." Id. at 412. "When considering a motion for summary judgment, the Court "resolve[s]factual controversies in favor of the nonmoving party." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
Before they sold their interests in 2007, Defendants Windham and Collier owned Como III Apartments, LLC ("Como III"). Doc. #47-2 at ¶ 1.
On October 31, 2003, Como III, through Windham and Collier, executed a promissory note in favor of Union Planters Bank NA. Doc. #39-1. The note, which carried a principal of $502,753 and an initial interest rate of 5%, required Como III to "pay [the] loan in one payment ... on October 31, 2004." Id. Also on October 31, 2003, Como III secured the note by executing in favor of Union Planters a deed of trust on property located in Como, Mississippi. Doc. #39-2. The deed of trust was recorded in the First Judicial District of Panola County on November 7, 2003. Id.
On January 26, 2005, Como III and Union Planters executed a Change in Terms Agreement regarding the October 31 promissory note. Doc. #39-3. Under the new agreement, Como III promised to pay an outstanding balance of $316,500 in 180 monthly payments of $2,117.06. Id. The same day, Como III and Union Planters executed a Modification of Deed of Trust to conform the original deed of trust to the terms of the new agreement. Doc. #39-4. The modified deed of trust was recorded on March 7, 2005. Id.
Also on January 26, 2005, Collier and Windham executed matching Commercial Guaranty agreements in which each "absolutely and unconditionally guarantee[d] and promise[d] to pay to Union Planters Bank ... any and all of [Como III's] indebtedness to [Union Planters]." Docs. #39-5; #39-6. In executing these agreements, Collier and Windham explicitly waived "any right to require [Union Planters] to resort for payment or to proceed directly ... against any person [or] to proceed directly against or exhaust any collateral." Docs. #39-5; #39-6. The guaranty agreements also provided that Collier and Windham "agree[d] to pay upon demand all of [Union Planters'] costs and expenses, including attorneys' fees and ... legal expenses ... incurred in connection with the enforcement of th[e] Guarant[ies]." Docs. #39-5; #39-6.
Sometime after the execution of the guaranties, Regions Bank became the successor in interest to Union Planters.1 Doc. #39-7 at ¶ 8.
In 2007, Windham and Collier sold their ownership interests in Como III to Affordable Housing Mississippi, LLC, and Kenneth Farrar. Doc. #47-2 at ¶ 3. Prior to the sale, the defendants, on Como III's behalf, "made all payments [on the promissory note] as they became due." Id. at ¶ 4.
In 2010, Affordable Housing Mississippi filed for bankruptcy in the Bankruptcy Court of the Northern District of Mississippi. See In Re Affordable Hous. Mississippi LLC, No. 10-14827 (Bankr. N.D. Miss. 2010).
At an unspecified time in 2012, Como III defaulted on the modified promissory note. Doc. #39-7 at ¶ 9.
On July 10, 2012, Henry Shelton, III, of the Adams and Reese law firm sent Collier a letter providing:
Should you not do so within the time required, then the Bank will pursue the collection of this debt in the appropriate forum.
Doc. #39-8. Shelton sent an identical letter to Windham. Id.
On July 25, 2012, Thomas Comer, Jr., of the Comer Law Firm, responded to Shelton on behalf of Collier and Windham. Doc. #39-9. In his letter, Comer advised that Collier and Windham disputed the debt and were "requesting copies of the nature and amount of the bank's claim." Id.
On August 1, 2012, Shelton sent Comer copies of the: (1) October 31, 2003, Deed of Trust; (2) October 31, 2003, Promissory Note; (3) January 26, 2005, Change in Terms Agreement; (4) January 26, 2005, Commercial Guaranty executed by Windham; (5) January 26, 2005, Commercial Guaranty executed by Collier; and (6) January 26, 2005, Modification of Deed of Trust. Doc. #39-10.
On December 10, 2012, Regions Bank filed this action. Doc. #1. In its complaint, Regions Bank asserts a single claim for breach of contract arising from Defendants' alleged failure to perform under their respective guaranties. Id. at ¶¶ 6-18.
According to Regions Bank, as of December 3, 2013, Como III owed Regions Bank: (1) principal in the amount of $204,054.81;2 (2) interest in the amount of $13,328.02; and (3) late fees in the amount of $5,208.00. Doc. #39-7 at ¶ 10. Also as of December 3, 2013, RegionsBank had incurred $16,782.05 in attorneys' fees and legal expenses in connection with prosecuting this action. Doc. #39-11.
On January 9, 2014, the bankruptcy court issued an Order Confirming Chapter 11 Plan in Affordable Housing Mississippi's bankruptcy case. Doc. #47-1; In Re Affordable Hous. Mississippi LLC, No. 10-14827 (Bankr. N.D. Miss. Jan. 9, 2014). The January 9 order provided:
The objection of Regions Bank was resolved by agreement of the Debtor and Regions that, while the Debtor is obligated on the Regions indebtedness, the collateral held by Regions to secure its indebtedness is not property of this bankruptcy estate. Regions, in its discretion, may accept payments from the Debtor, but its secured claims are otherwise not affected by this order.
Sometime later, Farrar informed Windham that "the loan ... has been reconfirmed by Regions Bank and that it is not in default." Doc. #47-2 at ¶ 9.
On December 5, 2013, Regions Bank filed this motion for summary judgment. Doc. #38. In its motion, Regions Bank argues that there is no genuine issue of material fact that Como III defaulted on its debt, and that Collier and Windham are liable for the amount owed to Regions Bank by Como III. Doc. #39. Specifically, based on breach of the guaranty agreements, Regions Bank seeks a judgment in the amount of: (1) the outstanding indebtedness (including interest and unpaid late charges) as of December 3, 2013; (2) attorneys' fees; (3) costs and expenses; (4) pre-judgment interest; and (5) post-judgment interest. Doc. #40 at 14.
In diversity actions, this Court applies the substantive law of the forum state. Wiley v. State Farm Fire and Cas. Co., 585 F.3d 206, 210 (5th Cir. 2009). To this end, under Mississippi law "[t]he elements of a breach of contract are: (1) the existence of a valid and binding contract; (2) that the defendant has broken, or breached it; and (3) that the plaintiff has been therebydamaged monetarily." Favre Prop. Mgmt., LLC v. Cinque Bambini, 863 So.2d 1037, 1044 (Miss. Ct. App. 2004) (citing Warwick v. Matheney, 603 So.2d 330, 336 (Miss. 1992)).
Here, the defendants concede the validity of the relevant documents. Doc. #47 at 3. Accordingly, the Court must decide whether there is a genuine issue of material fact as to whether the defendants breached the guaranty agreements and, if the defendants breached, whether Regions Bank suffered damages as a result of the breaches.
"A guaranty is a collateral undertaking by one person to answer for the payment of a debt or the performance of some contract or duty in case of the default of another person who is liable for such payment or performance in the first instance." Powell v. Sowell, 145 So.2d 168, 171 (Miss. 1962) (internal quotation marks omitted). Where, as here, a guaranty is made absolutely or unconditionally, it is said to be an "absolute guaranty." 38A C.J.S. Guaranty § 9.3 "An absolute ... guaranty is one by which the guarantor unconditionally promises payment or performance of the principal contract on default of the principal debtor or obligor." Id. Thus, "[i]n order to impose liability on the guarantor, there must be a default by the principal." Id. at § 71. "Liability accrues on an absolute guaranty when the principal defaults." Id. at § 87.
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