U.S. Through Small Business Admin. v. Light

• Decision Date: 05 July 1985
• Docket Number: No. 84-2182,84-2182
• Citation: 766 F.2d 394
• Parties: UNITED STATES of America, acting Through the SMALL BUSINESS ADMINISTRATION, Appellee, v. C.E. LIGHT, a/k/a Charles E. Light, Jr., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 394

766 F.2d 394

UNITED STATES of America, acting Through the SMALL BUSINESS

ADMINISTRATION, Appellee, v. C.E. LIGHT, a/k/a Charles E. Light, Jr., Appellant.

No. 84-2182.

United States Court of Appeals,

Eighth Circuit.

Submitted May 3, 1985.

Decided July 5, 1985.

Jerry L. Pollard of Yankton, S.D., for appellant.

R.P. Murley, Asst. U.S. Atty. of Sioux Falls, S.D., for appellee.

Before ROSS, ARNOLD and BOWMAN, Circuit Judges.

PER CURIAM.

Charles E. Light appeals from the District Court's ¹ entry of summary judgment against him in this action brought by the Small Business Administration (SBA) to enforce a guaranty agreement signed by Light. For reversal Light argues that the District Court (1) erred in granting summary judgment when there was an unresolved question of material fact and (2) abused its discretion in granting summary judgment before he had an opportunity to conduct any discovery. We affirm.

On October 14, 1976, Light signed an agreement personally guaranteeing a loan which Thunderbolt Enterprises, Inc. had obtained from the SBA. The principal amount of the loan was $200,000. The last sentence of the agreement stated, "Notwithstanding any other provision of this Guaranty, the liability of the undersigned shall be limited to $20,000.00." Designated Record (D.R.) at 6. The Thunderbolt loan also was secured by certain collateral.

In April 1977, Thunderbolt defaulted on its loan payments. In February 1980, the SBA foreclosed, and sold for $25,000 the collateral that had secured the Thunderbolt loan. The SBA then demanded that Light pay the $20,000 in accordance with the guaranty agreement, but Light refused. Light alleges that the SBA did not apply the $25,000 in proceeds from the sale of the collateral against the loan that the collateral had secured and that he had guaranteed, but that it wrongfully applied the $25,000 against a second, unsecured SBA loan made to Thunderbolt.

On August 30, 1983, the SBA filed this action against Light to collect on the guaranty. As a defense Light argued that before signing the guaranty, the SBA had agreed that he would be liable for only the first $20,000 that the SBA collected in the event of a default and that since the SBA collected $25,000 from the sale of collateral that had secured the loan, his obligation under the guaranty agreement was extinguished. After filing his answer, Light served a request for production of documents on the SBA, and the SBA obtained a protective order from the District Court allowing it not to respond to the request. On June 8, 1984, the SBA filed a motion for summary judgment, arguing that since the written guaranty agreement unequivocally demonstrated that Light's guarantee was not limited to the first $20,000 collected upon default, the parol evidence rule prevented Light from attempting to contradict the terms of the agreement. After Light filed affidavits and a response in opposition to the summary judgment motion and after the District Court held a hearing on the motion, the court, on July 10, 1984, entered summary judgment against Light. This appeal followed.

Light argues that the District Court erred in granting summary judgment against him because there was an unresolved question of material fact: whether the parties had agreed before Light signed the guaranty that he would be liable for only the first $20,000 collected in the event of a default. He further argues that for the purpose of reviewing the grant of summary judgment, this Court must assume that the SBA agreed to limit Light's liability in this manner.

An appellate court should sustain a grant of summary judgment only when there is "no genuine issue as to any material fact and the ... moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Elbe v. Yankton Independent School District No. 1, 714 F.2d 848, 850 (8th Cir.1983). Moreover, in reviewing a grant of summary judgment, the facts must be viewed in the light most favorable to the party opposing the motion for summary judgment, giving that party the benefit of all favorable inferences that reasonably may be drawn from the facts. 714 F.2d at 850. However, this does not mean, as Light appears to argue, that when an appellate court reviews the grant of summary judgment in a contract case, it must ignore the effect on the case of the parol evidence rule. If after applying the parol evidence rule there remains no genuine issue of material fact, summary judgment should be rendered for the party entitled to judgment as a matter of law. 6 J. Moore & J. Wicker, Moore's Federal Practice, p 56.17 (2d ed. 1982). Certainly an appellate court should consider whether the parol evidence rule was properly brought to bear on the case being reviewed, but the court is not required to act as if the parol evidence rule does not exist.

Under the parol evidence rule, extrinsic evidence is inadmissible to vary, contradict, or add to a written contract which is unambiguous, and in the absence of fraud, mistake, or accident, the written contract will be viewed as expressing the final intention of the parties upon the subject of the contract. Northwestern Public Service Co. v. Chicago & North Western Railway, 87 S.D. 480, 210 N.W.2d 158, 160 (1973). Because Light does not allege fraud, mistake, or accident in signing the guaranty agreement, the critical question here is whether the agreement is unambiguous.

The agreement provides in pertinent part:

[T]he Undersigned hereby unconditionally guarantees to Lender ... the due and punctual payment when due ... of the principal of and interest on ... the note of the Debtor, made by the Debtor to Pierre National Bank dated 3-17-76 in the principal amount of $200,000.00, assigned to the SBA on 9-23-76 with...