Sterling Sav. Bank v. Emerald Dev. Co.
Decision Date | 15 October 2014 |
Docket Number | C094420CV,A150048. |
Parties | STERLING SAVINGS BANK, by and through, NORTHWEST LENDING PARTNERS, LLC, Assignee, Plaintiff–Appellant, v. EMERALD DEVELOPMENT CO, an Oregon corporation; Lily Mirtorabi ; Jason Hossein Samani; Javad John Mirtorabi; Mehdi Mirtorabi; and Habib Matin, Defendants–Respondents, and Meridian Village No. 1, LLC, an Oregon limited liability company; et al, Defendants. |
Court | Oregon Court of Appeals |
Michael D. Montag, argued the cause for appellant. With him on the briefs were A. Richard Vial and Vial Fotheringham LLP.
Andrew T. Reilly, Portland, argued the cause for respondents. With him on the brief was Black Helterline LLP.
Before HASELTON, Chief Judge, and ARMSTRONG, WOLLHEIM, ORTEGA, SERCOMBE, DUNCAN, NAKAMOTO, HADLOCK, EGAN, DeVORE, LAGESEN, and TOOKEY, Judges, and SCHUMAN, Senior Judge.
During litigation of this collection action brought by plaintiff Sterling Savings Bank (Sterling) against the principal obligor and coguarantors of a promissory note, Northwest Lending Partners, LLC (Northwest) purchased the note and the guaranty agreements from Sterling. In conjunction with the purchase, Sterling settled with some of the coguarantors; subsequently, the trial court entered a limited judgment on the debt and a supplemental judgment awarding Sterling its attorney fees against the principal obligor and the remaining, nonsettling coguarantors. As proceedings to enforce the judgments were underway, however, the remaining coguarantors sought and obtained relief from the judgments under ORCP 71 B(1)(e).
Standing in Sterling's shoes,1 Northwest assigns error to (1) the trial court's decision to grant the nonsettling guarantors' motion for relief from the limited and supplemental judgments under ORCP 71 B(1)(e) and (2) the court's consequent entry of a general judgment vacating those judgments as against the nonsettling guarantors and dismissing with prejudice all claims against them. We conclude that the trial court erroneously concluded that the note and judgments had “been satisfied, released, or discharged” when Northwest purchased the promissory note from Sterling and, therefore, that the trial court erred by granting the motion for relief from the judgments under ORCP 71 B(1)(e) and by entering the general judgment. Accordingly, we reverse and remand for further proceedings.
We begin by summarizing the facts, most of which are procedural and undisputed. To the extent that there were relevant factual disputes before the trial court, we note the trial court's express findings, if any, and discuss any implicit findings necessary for the trial court's legal conclusions and the evidence relevant to such facts.
In or about 2003, two companies, Oak Brook Financial Corporation (Oak Brook) and Emerald Development Co. (Emerald) formed a joint venture called Meridian Village No. 1, LLC (Meridian) to develop a condominium project in Beaverton. Meridian then sought and obtained a $200,000 line of credit with Sterling, which was reflected in a promissory note.
Meridian was the primary obligor on the note, and Sterling also obtained guaranties for repayment of the loan. In total, the Sterling loan was guarantied by 10 people or entities: Oak Brook and its members Steven Hanson and Thomas Shauklas (collectively, the Oak Brook defendants); Emerald and its members Arya Nasorllah Matin and Habib Matin (collectively, the Matin defendants); and Lili Mirtorabi, Jason Hossein Samani, Javad John Mirtorabi, and Mehdi Mirtorabi (collectively, the Mirtorabi defendants).
The coguarantors executed individual guaranty agreements in 2003. Each guaranty agreement contained the following provisions relevant to this appeal:
Sterling extended the original line of credit to $1.7 million in 2004, and a new promissory note was created to reflect that extension. In April 2008, in an effort to renegotiate the terms of Sterling's loan to Meridian, the Oak Brook defendants proposed to make a payment of $700,000 on the loan in exchange for an indemnity agreement from their coguarantors and two related parties.2
The indemnity agreement was executed in April 2008 and provided, in part:
In June 2008, the Oak Brook defendants made the $700,000 payment to reduce the amount owed on the line of credit. The payment brought the total amount owing on the Sterling loan to just over $1 million.
Concomitantly, Sterling and Meridian executed a new promissory note. The note provided that Meridian promised to pay Sterling the principal amount of $1,010,273.50, together with interest on the unpaid principal balance from June 9, 2008, until paid in full. That payment was due on July 5, 2009. The 2008 note provided that default would occur if, among other things, Meridian failed to make any payment due under the note. On appeal, the parties do not dispute that the guaranties that the coguarantors executed in 2003 applied to the 2008 note.
In March 2009, Sterling declared Meridian in default for failure to make the monthly interest payments required under the 2008 note. In June 2009, Sterling sent Meridian a demand for payment of the entire unpaid principal balance and accrued interest under the note, but Meridian failed to make the payment. Sterling also sought payment from the coguarantors, who also failed to pay.
In July 2009, Sterling initiated this action in Washington County Circuit Court to collect full payment of the note, naming both Meridian and all of the coguarantors as defendants. Various defendants filed cross-claims.
After Sterling filed its action, the Oak Brook defendants initiated a separate action in September 2009 against the Matin and Mirtorabi defendants and the additional indemnitors to enforce the indemnity agreement. That action, filed in Multnomah County Circuit Court due to the forum-selection clause contained in the indemnity agreement, was stayed pending the outcome of the Washington County case.
In June 2010, Sterling filed a motion for summary judgment against all defendants. The trial court held a hearing on the motion on October 25, 2010. During the hearing, the Oak Brook defendants reported that they had reached a settlement agreement with Sterling, and Sterling notified the court that it was withdrawing its motion for summary judgment as to those three defendants.
The settlement documents...
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