Seftel v. Capital City Bank, 870312-CA
Decision Date | 12 January 1989 |
Docket Number | No. 870312-CA,870312-CA |
Citation | 767 P.2d 941 |
Parties | Sidney SEFTEL, Theresa Seftel, and Michael Landes, Plaintiffs and Appellants, v. CAPITAL CITY BANK, a Utah corporation, Defendant and Respondent. CAPITAL CITY BANK, a Utah corporation, Counterclaimant, v. Sidney SEFTEL, Theresa Seftel, Michael Landes, Utah State Tax Commission, Crossroads Plaza Associates, a Utah joint venture and general partnership, Young Electric Sign Company, a Utah corporation, and Olympus Hills Shopping Center, LTD., a Utah limited partnership, Counterclaim Defendants. |
Court | Utah Court of Appeals |
Daniel W. Jackson (argued), Salt Lake City, for plaintiffs and appellants.
David M. Connors (argued), LeBoeuf, Lamb, Leiby & McRae, Salt Lake City, for Landes.
Steven T. Waterman (argued), Herschel J. Saperstein, Marco B. Kunz, Watkiss & Campbell, Salt Lake City, for defendant and respondent.
Before BILLINGS, JACKSON and ORME, JJ.
Plaintiffs/appellants, Sidney Seftel, Theresa Seftel, and Michael Landes, ("guarantors") appeal from the trial court's summary judgment dismissing their complaint and granting defendant/respondent, Capital City Bank, ("Capital") judgment in the amount of $293,319.64 and issuing a decree of foreclosure. Guarantors seek a reversal of the trial court's order. We affirm.
On December 24, 1979, Bagel Nosh Intermountain, Ltd., ("Bagel Nosh") executed a note in favor of Capital in the principal amount of $300,000. Under the terms of the note, the Small Business Administration ("SBA") was a 90% participating lender. The note also provides it is to be enforced in "accordance with applicable federal law."
As additional consideration for the loan, guarantors each executed unconditional personal guaranties. The guaranties were secured by trust deeds to real property owned by guarantors and located at Snowbird. The guaranties were executed on SBA forms in favor of both the SBA and Capital as "co-lenders." Specifically, the guaranties state:
In order to induce Capital City Bank and SBA (hereinafter called "Lender") to make a loan ... to Bagel Nosh Intermountain, LTD. (Inc.) ... (hereinafter called the "Debtor"), the Undersigned hereby unconditionally guarantees to Lender, ... the due and punctual payment when due, ... of the principal of and interest on and all sums payable ... with respect to the note of the Debtor....
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 with respect to any of the Liabilities.... The Undersigned hereby grants to Lender full power, in its uncontrolled discretion and without notice to the undersigned ..., to deal in any manner with the Liabilities and the collateral, including, ... the following powers:
(a) To modify or otherwise change any terms of all or any part of the Liabilities ... to grant any extension or renewal thereof ... and to effect any release, compromise or settlement with respect thereto;
* * *
(d) To consent to the substitution, exchange, or release of all or any part of the collateral....
The obligations of the Undersigned hereunder shall not be released, discharged, or in any way affected, nor shall the Undersigned have any rights or recourse against Lender, by reason of any action Lender may take or omit to take under the foregoing powers.
On March 30, 1983, following several months of nonpayment, Bagel Nosh and Capital entered into a Loan Restructure Agreement ("Agreement") modifying the terms of the original note. The Agreement was signed by Sidney Seftel and provided in relevant part:
Capital ... agrees to modify the terms of the loan agreement dated December 24, 1979, between [Capital] and [Bagel Nosh] under the following conditions:
5. Sidney Seftel and Michael Landes personally guarantee [Capital's] loan to the Borrower. Each is personally liable for the entire indebtedness to [Capital]....
6. Any item in the loan agreement dated December 24, 1979, that is not specifically modified by this loan restructure agreement remains in full force.
Guarantors complied with the terms of the Agreement and made several payments thereunder.
On November 29, 1984, Bagel Nosh filed a voluntary petition under Chapter 11 of the Bankruptcy Code. On March 11, 1986, guarantors filed this action for declaratory relief requesting the trial court to discharge them from any obligations under their personal guaranties on the grounds that Capital, (1) willfully impaired the collateral originally pledged to secure the note, (2) recklessly lost their security, and (3) substantially modified guarantors' obligations underlying the guaranties by the Loan Restructure Agreement.
Capital counterclaimed requesting the trial court to declare the guaranties and corresponding trust deeds valid enforceable obligations. Capital further requested a judicial decree of foreclosure on the trust deeds.
On July 25, 1986, Capital filed a motion for summary judgment on the issues in guarantors' complaint and Capital's counterclaim. Capital claimed the note, Agreement, and guaranties were all in default. Capital argued the guaranties were enforceable, thus, they were entitled to judgment as a matter of law because, (1) pursuant to Utah Code Ann. § 70A-3-301 (1978), as holder of the guaranties, Capital was entitled to enforce them, (2) guarantors by prior judicial admissions were estopped from denying liability, and (3) under the express provisions of the guaranties, guarantors waived the defenses set forth in their complaint.
In support of its motion for summary judgment, Capital submitted, among a number of documents, the affidavit of M.A. Allem, Capital's executive vice president. In his affidavit, Mr. Allem states in pertinent part that the "SBA is a participating lender in the loan of Capital City to Bagel Nosh to the extent of ninety percent (90%) of the outstanding unpaid balance."
On September 5, 1986, Capital filed the supplemental affidavit of Mr. Allem which stated:
5. Capital City is entitled to sue upon the loan instruments including acceleration of the maturity of the note and guaranties provided Capital City has obtained the written consent of SBA.
6. Capital City is the legal holder of the note and guaranties involved in this action, and Capital City has not transferred the note or guaranties to SBA and has been authorized in writing by SBA to sue upon the note and guaranties....
On September 11, 1986, guarantors filed their memorandum in opposition to Capital's motion for summary judgment claiming for the first time that the SBA was an indispensable party, and thus must be joined in order for Capital to enforce the guaranties.
On February 4, 1987, the trial court issued its memorandum decision granting summary judgment in favor of Capital on all issues in the complaint and counterclaim. Guarantors appeal this order.
In its memorandum decision, the trial court found that Capital was entitled to enforce the guaranties and the SBA was not an indispensable party. Although we find the trial court did not properly analyze the issue of whether the SBA is an indispensable party, we affirm the trial court's decision as we find based upon the undisputed facts in the record, the SBA is not, as a matter of law, an indispensable party.
In its February 4th memorandum decision the trial court stated:
Plaintiffs have further alleged that an indispensable party, the Small Business Administration, has not been joined. That defense is without merit. In the first instance, the defense has not been pled, but additionally, the SBA is not under the present interpretation of the Rules of Procedure an indispensable party to this action.
Guarantors claim the trial court committed reversible error by permitting Capital to enforce the guaranties without making particularized findings pursuant to Rule 19 of the Utah Rules of Civil Procedure. 1 While actual findings of fact were not strictly required as this matter was presented on a motion for summary judgment, the guarantors' basic contention is well-taken. We note that Rule 19 of the Utah Rules is substantively similar to its federal counterpart, see Utah R.Civ.P. 19 compiler's notes, and in the absence of Utah authority, we resort to the more abundant federal case law for guidance. We also note that a party may raise the issue of failure to join an indispensable party at any time in the proceedings, including for the first time on appeal. See, e.g., Kroblin Refrigerated Xpress, Inc. v. Pitterich, 805 F.2d 96, 104 (3rd Cir.1986). Accordingly, this issue is properly before us.
Ordinarily, a trial court's determination properly entered under Rule 19 will not be disturbed absent an abuse of discretion. See, e.g., Bonneville Tower v. Thompson Michie Assocs., 728 P.2d 1017, 1020 (Utah 1986); Navajo Tribe of Indians v. New Mexico, 809 F.2d 1455, 1471 (10th Cir.1987); Walsh v. Centeio, 692 F.2d 1239, 1241 (9th Cir.1982). Whether a party is indispensable to the action depends on a number of factors all "varying with the different cases, some such factors being substantive, some procedural, some compelling by themselves, and some subject to balancing against opposing interests." Provident Tradesmens B. & T. Co. v. Patterson, 390 U.S. 102, 119, 88 S.Ct. 733, 743, 19 L.Ed.2d 936 (1968). 2
Federal authorities addressing the analytical requirements of Rule 19 uniformly require a court to follow a two-part inquiry. See, e.g., Ogalalla Land Ltd. v. Wexpro Co., 587 F.Supp. 453, 454 (D.Wyo.1984) (citing Wright v. First Nat'l Bank, 483 F.2d 73 (10th Cir.1973)). Pursuant to subsection (a), "a court must first determine whether an absent party has sufficient interest in the action to make it a necessary party," considering the criteria set forth in the Rule. 3 Manygoats v. Kleppe, 558 F.2d...
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