Opinion
No. COA11–1115.
2012-05-1
BANK OF THE CAROLINAS, Plaintiff–Appellee, v. Robert W. BURKETT, Defendant–Appellant.
Bell, Davis & Pitt, P.A., by D. Anderson Carmen and Adam T. Duke, for Plaintiff–Appellee. Sellers, Hinshaw, Ayers, Dortch & Lyons, P.A., by Brett E. Dressler and Michelle Price Massingale, for Defendant–Appellant.
Appeal by Defendant from order entered 9 May 2011 by Judge L. Todd Burke in Superior Court, Forsyth County. Heard in the Court of Appeals 23 January 2012. Bell, Davis & Pitt, P.A., by D. Anderson Carmen and Adam T. Duke, for Plaintiff–Appellee. Sellers, Hinshaw, Ayers, Dortch & Lyons, P.A., by Brett E. Dressler and Michelle Price Massingale, for Defendant–Appellant.
McGEE, Judge.
Robert W. Burkett (Defendant) entered into a guaranty agreement (the guaranty) with Bank of the Carolinas (Plaintiff) on 5 October 2004. The guaranty was executed in conjunction with a loan agreement (the loan) between Plaintiff and Town Center Hardware, Inc. (the Borrower) in the amount of $678,776.00. Pursuant to the guaranty, Defendant agreed to guarantee the loan for up to $100,000.00.
There was an outstanding balance on the loan of $407,510.60, plus accrued interest in the amount of $20,238.82, when the Borrower defaulted on the loan. At the time of default, the Borrower had paid over $100,000.00 toward the principal amount of the loan. Plaintiff, pursuant to the guaranty, attempted to collect $100,000.00 from Defendant. Defendant argued, however, that he was no longer liable for any guaranty payment because the Borrower had paid more than $100,000.00 on the loan. Defendant had not paid any monies to Plaintiff for the purpose of paying down Defendant's liability under the guaranty. Plaintiff then filed this action on 26 May 2010, seeking the $100,000.00 it claimed Defendant owed pursuant to the guaranty, plus interest and costs. Defendant answered on 31 August 2010, claiming that he had fully performed under the terms of the guaranty. Plaintiff moved for summary judgment on 15 April 2011. Summary judgment was granted in favor of Plaintiff by order filed 9 May 2011, and the trial court ordered Defendant to pay the $100,000.00 guaranty amount, plus interest and costs, including attorney's fees. Defendant appeals.
Defendant argues that the trial court erred in granting summary judgment in favor of Plaintiff. We disagree.
“Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows that ‘there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.’ “ In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation omitted).
Plaintiff's claim, which is based upon the guaranty agreement, is an action on a contract.
In an action on a contract, the intention of the parties to the contract must be determined from the language of the contract, the purpose and subject matter of the contract and the situation of the parties. When the language of the contract is clear and unambiguous, construction of the agreement is a matter of law for the court[,] ... and the court cannot look beyond the terms of the contract to determine the intentions of the parties.
Piedmont Bank & Trust Co. v. Stevenson, 79 N.C.App. 236, 240, 339 S.E.2d 49, 52 (1986) (citations omitted). Because we find that the relevant language is unambiguous, this issue was a matter of law, and was properly decided upon summary judgment.
The relevant language of the guaranty is as follows:
The liability of [Defendant] shall be limited to a principal amount of $100,000.00 (if unlimited or if no amount is stated, [Defendant] shall be liable for all Indebtedness, without any limitation as to amount), plus accrued interest thereon and all attorneys' fees, collection costs and enforcement expenses referable thereto. Indebtedness may be created and continued in any amount, whether or not in excess of such principal amount, without affecting or impairing the liability of [Defendant]. [Plaintiff] may apply any sums received by or available to [Plaintiff] on account of the Indebtedness from Borrower or any other person (except [Defendant] ), from their properties, out of any collateral security or from any other source to payment of the excess. Such application of receipts shall not reduce, affect or impair the liability of [Defendant]. If the liability of [Defendant] is limited to a stated amount pursuant to this paragraph ..., any payment made by [Defendant] under this guaranty shall be effective to reduce or discharge such liability only if accompanied by a written transmittal document, received by [Plaintiff], advising [Plaintiff] that such payment is made under this guaranty for such purpose.
Defendant argues that his liability under the guaranty was limited to the “first” $100,000.00 paid on the loan, no matter from what source that first $100,000.00 came. Defendant does not argue that he personally paid off any of the loan secured by the guaranty. There is no record evidence that Defendant has paid anything pursuant to the guaranty. Defendant attempts to introduce evidence concerning understandings and oral agreements he contends existed between himself and Plaintiff. Because the plain language of the guaranty is clear, we are bound thereby. Stevenson, 79 N .C.App. at 240, 339 S.E.2d at 52.
The guaranty states that Defendant is liable for up to $100,000.00 of the original $678,776.00 loan. The guaranty also states that “sums received” by Plaintiff from any person other than Defendant “shall not reduce, affect or impair the liability of” Defendant. Finally, the guaranty had a specific provision concerning what kinds of payments could reduce Defendant's liability before satisfaction of the loan amount:
If the liability of [Defendant] is limited to a stated amount pursuant to this paragraph ..., any payment made by [Defendant] under this guaranty shall be effective to reduce or discharge such liability only if accompanied by a written transmittal document, received by [Plaintiff], advising [Plaintiff] that such payment is made under this guaranty for such purpose.
Pursuant to the guaranty, Defendant could reduce his $100,000.00 liability under the guaranty if he (1) personally paid Plaintiff for that purpose, and (2) gave Plaintiff written notification that Defendant's payment was meant to be applied towards his $100,000.00 liability. When the relevant section of the guaranty is read as a whole, there is no ambiguity in its language concerning how and when Defendant's liability for the $100,000.00 could be satisfied. The guaranty makes clear that Defendant's liability was not diminished or extinguished by payments toward the full loan amount made by the Borrower, or any person other than Defendant. Defendant failed to produce any evidence that he complied with either of the requirements needed to reduce or extinguish his liability. Because the amount remaining on the loan exceeded $100,000.00, pursuant to the guaranty, Plaintiff was authorized to collect $100,000.00 from Defendant. The trial court did not err in granting summary judgment in favor of Plaintiff.
Defendant does not argue on appeal that the trial court erred in ordering Defendant to pay interest plus costs, including attorney's fees. Therefore, Defendant has abandoned any such argument. N.C.R.App. P. 28(b)(6).
Defendant also argues that summary judgment in favor of Plaintiff was erroneous because Defendant alleged fraud and breach of the duty of good faith and fair dealing as defenses to Plaintiff's action. We disagree.
We do not believe any extensive analysis of these issues is required. The guaranty is clear in its terms, and Defendant executed the guaranty. Defendant is charged with knowledge of the express terms of the guaranty.
A person who executes a written instrument is ordinarily charged with knowledge of its contents, and may not base an action for fraud on ignorance of the legal effect of its provisions. While these rules do not apply to situations in which the person making the misrepresentations stands in a fiduciary relationship to the signing party, the relationship between a creditor and a guarantor is not such a relationship. In short, we hold that defendants' reliance, if any, on alleged misrepresentations made by plaintiff's agent was unreasonable as a matter of law. We further hold that plaintiff's agent had no duty to “disclose” to defendants the clear terms of the guaranty.
International Harvester Credit Corp. v. Bowman, 69 N.C.App. 217, 220, 316 S.E.2d 619, 621 (1984) (citations omitted).
We hold that the trial court did not err in granting summary judgment in favor of Plaintiff.
Affirmed. Chief Judge MARTIN and Judge CALABRIA concur.
Report per Rule 30(e).