Terracino v. Gordon, 29837.

• Decision Date: 22 June 2010
• Docket Number: No. 29837.,29837.
• Citation: 1 A.3d 97,121 Conn.App. 795
• Court: Connecticut Court of Appeals
• Parties: Jerome G. TERRACINO et al. v. GORDON AND HILLER et al.

121 Conn.App. 795

1 A.3d 97

Jerome G. TERRACINO et al.

v.GORDON AND HILLER et al.

No. 29837.

Appellate Court of Connecticut.

Argued Oct. 27, 2009.

Decided June 22, 2010.

Michael S. Lynch, Shelton, for the appellants (plaintiffs).

Robert W. Cassot, with whom, on the brief, were Cristin E. Sheehan, Hartford, and Kristine R. Jones, for the appellees (defendants).

FLYNN, C.J., and LAVINE and

PETERS, Js. ^*

PETERS, J.

This case lies at the intersection of two principles of the law of suretyship. One principle permits a guarantor expressly to waive common-law defenses to his liability for the debt of another. Connecticut National Bank v. Douglas, 221 Conn. 530, 544-45, 606 A.2d 684 (1992). The other principle presumes that, between coguarantors for the same debt, each coguarantor is liable only for a contributive share of the total outstanding debt. Restatement (Third), Suretyship and Guaranty §§ 55 through 57 (1996); Collins v. Throckmorton, 425 A.2d 146, 151-52 (Del.1980); Albrecht v. Walter, 572 N.W.2d 809, 812-13 (N.D.1997). The plaintiffs are guarantors who, in a prior action, have been held liable for the total amount of the debt that they underwrote. Invoking the second principle, they have brought a malpractice action against the defendants, their former attorneys, for failing to discover, in a timely fashion, that a coguarantor was an intermediate transferee of the guaranteed debt. Relying on the broad language of the guarantees executed by the plaintiffs, the trial court granted the defendants' motion for summary judgment. The plaintiffs have appealed. We affirm the judgment of the trial court.

In a two count complaint filed February 22, 2006, the plaintiffs, Jerome G. Terracino and Guardian Systems, Inc. (Guardian), sued their former attorneys, the defendants, Gordon and Hiller and A. Reynolds Gordon, for monetary damages for legal malpractice. They alleged that the defendants had failed to exercise due diligence in discovering evidence that would have altered the outcome in litigation that resulted in a judgment in favor of Fairway Asset Management, Inc. (Fairway), in the amount of $324,631.08, postjudgment interest now exceeding $100,000 and attorney's fees of $7500. ¹ In addition to denying many of the plaintiffs' factual allegations, the defendants moved for summary judgment on the ground that the newly discovered evidence would not have altered the outcome of the underlying action because of the guarantees signed by the plaintiffs. The court, Shaban, J., granted the motion, and the plaintiffs have appealed.

Largely relying on the facts of record in related prior court opinions, the trial court made the following findings. “In July of 1991, Mutual Communications Associates (Mutual) borrowed $270,000 from Brookfield Bank pursuant to a mortgage, promissory note and commercial agreement of guarantee. Jerome Terracino, Robert Rossman and Richard DeMarsico, the corporate officers of Mutual, all signed as guarantors on the note.

Terracino and Rossman also signed an additional guarantee as the principals and officers of Guardian Systems, Inc., an alarm company.

“On May 8, 1992, the Federal Deposit Insurance Corporation (FDIC) took possession of the assets of Brookfield Bank, including the promissory note, mortgage and [guarantees].” When Mutual defaulted on the loan, “the FDIC ... foreclosed against Mutual, Guardian, Terracino, Rossman and DeMarsico, and a judgment of strict foreclosure entered in February of 1997. ² Thereafter, the FDIC sold the note to JLM Corporation [JLM], [which] filed a motion for deficiency judgment against the guarantors.”

The note, the guarantees and the deficiency claim were then assigned to various successive takers. JLM assigned them to Andrew Buzzi, Jr., as trustee, ³ who then assigned them to Consolidated Asset Management, LLC (Consolidated), which, in October, 1998, assigned them to Fairway. Following this assignment, Fairway was substituted as a party to JLM's motion for deficiency judgment.

Defending against Fairway's action for a deficiency judgment, the present plaintiffs argued that, because they were coguarantors with Rossman, their liability was limited to that of a proportionate contribution toward funds actually paid on behalf of Rossman for the note. The court, DiPentima, J., rejected this argument and rendered judgment in favor of Fairway. This court affirmed the judgment in Federal Deposit Ins. Corp. v. Mutual Communications Associates, Inc., 66 Conn.App. 397, 400, 784 A.2d 970 (2001), appeal dismissed, 262 Conn. 358, 814 A.2d 377 (2003) (certification improvidently granted).

Thereafter, the present plaintiffs filed a motion for a new trial in which they alleged that newly discovered evidence demonstrated that Rossman in fact had acquired the promissory note from JLM, and that this evidence demonstrated that their liability was limited to that of coguarantors. Judge DiPentima denied this motion as well, concluding that even if such evidence had been presented earlier, it would not have affected the outcome of the case. This court again affirmed the judgment. Terracino v. Fairway Asset Management, Inc., 75 Conn.App. 63, 815 A.2d 157, cert. denied, 263 Conn. 920, 822 A.2d 245 (2003). ⁴

Relying on the defendants' presentation of uncontroverted documentary evidence containing the plaintiffs' guarantees, Judge Shaban granted the defendants' motion for summary judgment in the malpractice action. The court based its judgment on the plain language of the guarantee agreements, which provide that “[t]he liability of the [g]uarantor hereunder is direct, absolute and unconditional without regard to the liability of any other person” and that “[the] obligations and liabilities hereunder shall in no way be released ... by reason of the release of, or unenforceability of any agreement or undertaking by any other guarantor or other party liable....”

The plaintiffs' appeal raises two issues. They maintain that (1) their guarantees were no longer enforceable once their coguarantor, Rossman, acquired the promissory note and (2) unresolved issues of material fact made it inappropriate to grant the defendants' motion for summary judgment. We are not persuaded.

“We apply a well settled standard of review to the [plaintiffs'] claim that the court improperly rendered summary judgment. Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party....

“On appeal, we must determine whether the legal conclusions reached by the trial court are legally and logically correct and whether they find support in the facts set out in the memorandum of decision of the trial court.... Our review of the trial court's decision to grant the defendant's motion for summary judgment is plenary.” (Citations omitted; internal quotation marks omitted.) Keller v. Beckenstein, 117 Conn.App. 550, 556-58, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).

I THE ENFORCEABILITY OF THE PLAINTIFFS' GUARANTEES

The plaintiffs' principal claim on appeal is that the court improperly relied on the guarantees that they had executed in support of Mutual's indebtedness to Brookfield Bank and its assignees. In their view, once Rossman acquired the note, ⁵ the only enforcement rights that Rossman or subsequent assignees were entitled to exercise against the plaintiffs were pro rata rights of contribution for the amount paid by Rossman to acquire the note. In the absence of disagreement about the text of the relevant guarantees, the plaintiffs are entitled to plenary review of this claim. See Trugreen Landcare, LLC v. Elm City Development & Construction Services, LLC, 101 Conn.App. 11, 13-14, 919 A.2d 1077 (2007).

The undisputed record at trial contained two guarantees signed by Terracino. One was an agreement that was part of the loan note executed by Mutual, and the other was a commercial agreement of guarantee.

In conjunction with the loan note, Terracino agreed: “Even if I'm signing this Note with another person or persons, I am obligated to pay the entire amount owing under it. You may require that I pay this amount without asking any other person to pay. You don't have to notify me that the loan made under this Note hasn't been paid by any other person. You and any person signing this Note can repeatedly agree to renew or extend it for any length of time, revise its terms, release any of the security or release anyone from liability under this Note without notifying me or releasing me from my responsibility on this Note. My obligation to pay is absolute and not conditioned on anything.”

In the guarantee agreement, which Terracino executed for himself and as a corporate officer of Guardian, he agreed that (1) “this [g]uaranty is irrevocable ... until the indebtedness has been fully and finally paid to the [b]ank,” (2) “[t]he [g]uarantor expressly agrees that its obligations and liabilities hereunder shall in no way be released, lessened, or impaired by reason of the release of, or unenforceability of any agreement or undertaking by any other guarantor or other party liable, whether primarily or secondarily, for the repayment of all or any part of the indebtedness,” and (3) “[i]f there is more than one [g]uarantor of all or any portion of the [i]ndebtedness, their liability shall be joint and several.” Rossman signed an identical guarantee agreement.

It is useful to start our analysis of the plaintiffs' claims on appeal by identifying the claims the plaintiffs do not make. The plaintiffs do not take issue with the breadth of the text of these guarantees. They do not argue that they subscribed to these guarantees without having had the opportunity...