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Summary Judgment For Assignee of Note and Guaranty

On July 26, 2013, Judge Turk entered summary judgment in the amount of $3.2 million in favor of the assignee of a note and personal guaranty.  See City National Bank v. Tress (WDVa 2013).  The defendants had agreed to guaranty the repayment of a note that secured commercial loans made to their LLC.  The LLC, however, soon stopped making payments on the note and went into receivership.  Plaintiff purchased the note and guaranty, but apparently there were problems with how the note was endorsed by the original noteholder.  Defendants, therefore, argued that the personal guaranty was not enforceable since the underlying note was arguably not enforceable by plaintiff.  The Court, however, ruled that under McDonald v. National Enterprises Inc., 547 S.E. 2d 204 (Va. 2001), the guaranty was an independent contract that could be enforced even if plaintiff would not have been able to enforce the note.  The enforceability of the guaranty depended on whether the note had been repaid.  Since the obligation on the note remained outstanding, the personal guaranty could be enforced even if plaintiff could not enforce the note itself.

Copyright © 2023 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume III, Number 257
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About this Author

Jason Hicks, Antitrust Attorney, Womble Carlyle, Government Contracting Lawyer
Partner

Jason Hicks is a member of the Firm's Antitrust, Distribution and Franchise Law Practice Group. Jason has experience litigating cases and counseling clients in a wide variety of matters involving federal and state antitrust laws, franchise and dealer protection statutes, unfair and deceptive trade practices, advertising laws and regulations, industry-specific trade regulations, contract disputes, business torts, and constitutional law. Jason's practice focuses on helping clients efficiently and effectively move their products through various levels of distribution by developing strategies...

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