Opinion
No. 02-0208 SECTION: "R" (5)
September 30, 2002
ORDER AND REASONS
Before the Court are cross-motions of plaintiff, Wayne M. Rousseau, and defendant, 3 Eagles Aviation, Inc. for summary judgment concerning the enforcement of a guaranty issued by Rousseau in favor of 3 Eagles. For the following reasons, the Court GRANTS summary judgment to 3 Eagles, enforcing Rousseau's guaranty and rejecting his defenses of novation and release by material alteration.
I. BACKGROUND
Wayne Rousseau and Claudius Rollins were sole shareholders of Rollins Air, Inc., a Honduran corporation. On September 24, 1997, Rollins Air signed a promissory note in connection with its purchase from 3 Eagles Aviation of an airplane, the Nomad N-244E, for $538,000.00. Wayne Rousseau and Claudius Rollins guaranteed this note. The guaranty provides that the guarantors "jointly and severally unconditionally guarantee all of the obligations of this Note." (Def.'s Mem. Supp. Cross Mot. Summ. J. Ex. 2.)
On or about November 20, 1997, the airplane was damaged during a landing. On December 18, 1997, Claudius Rollins and 3 Eagles arranged for Rollins Air to acquire a replacement airplane, to be funded by Rollins Air's insurance proceeds and loans extended by 3 Eagles. Rollins Air executed a second promissory note ("December Note") in favor of 3 Eagles, in which Rollins Air agreed to pay 3 Eagles $793,277.00. Claudius Rollins signed the Note on behalf of Rollins Air as President. Immediately beneath the Borrower's signature on the Note, Rousseau signed an "unconditional" guaranty of "all of the obligations" of the Note. ( Id. at Ex. 3.) Claudius Rollins signed as a co-guarantor. Rousseau signed a multiple original of the guaranty before a notary in Louisiana and mailed it to 3 Eagles' counsel in Florida. Rousseau was in possession of the entire Note when he signed the guaranty on the last page. Rousseau understood that signing the December Note as a guarantor meant that he was responsible for Rollins Air's debt. ( See Rousseau Depo., attached to Def.'s Suppl. Mem. Supp. Cross Mot. Summ. J. Ex. A at 53.)
The December Note contained a clause which recited that the Borrower and all guarantors agreed to be liable unconditionally and that they consented to any extension or modification granted by the Lender, as well as to any release of collateral for the Note:
Borrower and all endorsers, sureties and guarantors, hereby jointly and severally waive presentment for payment, demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this note, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this note, and they agree that each shall have unconditional liability without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Lender. Borrower and all endorsers, sureties, and guarantors consent to any and all extensions of time, renewals, waivers or modifications that may be granted by Lender with respect to the payment or other provisions of this Note, and to the release of any collateral or any part thereof, with or without substitution, and agree that additional borrowers, endorsers, guarantors, or sureties may become parties hereto without notice to them or affecting their liability hereunder.
( Id. § 10(b).) Lastly, the December Note contained a choice of law clause providing that it "shall be construed and enforced" in accordance with Florida law. ( Id. § 19.)
Rollins Air fell into arrears in its payments on the Note. On February 22, 1999, Rollins Air met with 3 Eagles in Honduras, where the parties negotiated an "Amendment to Promissory Note Dated December 18, 1997" ("February Amendment"). Rousseau was not present at the negotiations, nor did he sign the February Amendment. The February Amendment is self-described as "a legal[ly] binding addendum to the original contract." (Pl.'s Mem. Supp. Mot. Summ. J. Ex. 2.) The Amendment stated that it "in no way relieves [Rollins Air] from existing obligations." ( Id.)
The February Amendment contained the following terms: (1) should Rollins Air sell the aircraft Nomad HR-ARH for $220,000.00, the full amount would go to 3 Eagles to reduce Rollins Air's outstanding debt; (2) upon receipt of this $220,000.00, 3 Eagles would give Rollins Air a three-month payment-free grace period so that Rollins Air could use any earnings during that time to establish working capital; (3) upon sale of the Nomad, 3 Eagles would restructure Rollins Air's loan payments to satisfy the lower principal amount; (4) as Rollins Air reduced principal, 3 Eagles would release its encumbrances, while assuring itself security of any outstanding debt; and (5) 3 Eagles would try to sell two Ahison B-17 engines and support parts owned by Rollins Air, and any money received would go towards payment of the purchase price of engines contained in the original contract, but any losses would be shared equally by 3 Eagles and Rollins Air.
Rollins Air remained in default on the December Note. 3 Eagles requested payment repeatedly and sent demand letters to Rousseau and Claudius Rollins as guarantors. Rousseau and Claudius Rollins did not pay 3 Eagles, and 3 Eagles sued them and Rollins Air in Florida state court. Rollins Air failed to answer 3 Eagles' complaint, and on October 24, 2001, the Florida court entered a default judgment as to Rollins Air and Claudius Rollins. On October 30, 2001, Rousseau filed a motion to dismiss for lack of personal jurisdiction, which the court granted. On April 29, 2002, the Florida court entered Final Judgment as to Rollins Air and Claudius Rollins, awarding 3 Eagles $837,860.46 plus interest until paid.
Rousseau sued 3 Eagles in this Court for declaratory relief to absolve himself from his obligations as guarantor of Rollins Air's debt. Rousseau now asks this Court to grant summary judgment in his favor on the grounds that (1) the February Amendment created a novation of the December Note, thereby extinguishing his obligation as a guarantor, or, alternatively, (2) the February Amendment materially altered the terms of the December Note without his consent, thereby extinguishing his obligation as a guarantor. Also Rousseau says that if he read the December note, he did not understand it. In response, 3 Eagles filed a cross-motion for summary judgment, arguing that (1) the Florida court's Final Judgment is res judicata as to Rousseau; (2) the February Amendment did not create a novation of the December Note; (3) the February Amendment did not materially alter the terms of the December Note and, even if it did, Mr. Rousseau consented to an unconditional guaranty, which expressly authorizes alterations of the December Note; and (4) Rousseau's defense that he did not understand the contract is meritless.
The Court rules on these motions as follows.
II. Discussion
A. Legal Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 2552 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511 (1986)). The moving party bears the burden of establishing that there are no genuine issues of material fact.
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue exists for trial. See id. at 325, 106 S.Ct. at 2553-54; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1996)
The Fifth Circuit has "arguably articulated an even more lenient standard for summary judgment in certain nonjury cases." Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 273 n. 15 (5th Cir. 1987). In Nunez v. Superior Oil Co., 572 F.2d 1119, 1123-24 (5th Cir. 1978), the Fifth Circuit explained:
If decision is to be reached by the court, and there are no issues of witness credibility, the court may conclude on the basis of the affidavits, depositions, and stipulations before it, that there are no genuine issues of material fact, even though decision may depend on inferences to be drawn from what has been incontrovertibly proved.
Therefore, in a nonjury case, such as this case, the Court is encouraged to draw inferences, even when they appear to be factual, if a "trial on the merits would reveal no additional data." Id. at 1124; see also Professional Geophysics, Inc. v. Placid Oil Co., 932 F.2d 394, 398 (5th Cir. 1991)
B. Res Judicata
3 Eagles argues that this Court should apply the doctrine of res judicata to the Florida state court's Final Judgment as to Rollins Air and Claudius Rollins and declare the December Note valid and enforceable against Rousseau. A federal court must apply the preclusion rules of the state in which judgment was rendered. See Harper Macleod Solicitors v. Keaty Keaty, 260 F.3d 389, 396 (5th Cir. 2001). Accordingly, this Court will apply Florida law.
Under Florida law, for a prior judgment to have res judicata effect, the first and later actions must share the following elements: (1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of the parties to the actions; and (4) identity of the quality or capacity of the person for or against whom the claim is made. See Sewell v. Merrill Lynch, Pierce, Fenner Smith, 94 F.3d 1514, 1518 (11th Cir. 1996) State Farm Mut. Auto. Ins. Co. v. Yenke, 804 So.2d 429, 431 (Fla. 5th Dist.Ct.App. 2001) (citing ICC Chemical Corp. v. Freeman, 640 So.2d 92, 93 (Fla. 3d Dist.Ct.App. 1994)). Further, the prior judgment must have been a final judgment on the merits rendered by a court of competent jurisdiction. See Florida DOT v. Juliano, 801 So.2d 101 (Fla. 2001) (citing Kimbrell v. Paige, 448 So.2d 1009, 1012 (Fla. 1984)). A dismissal for lack of personal or subject matter jurisdiction is not a judgment on the merits. See American National Bank v. FDIC, 710 F.2d 1528, 1535-36 (11th Cir. 1983)
The Florida court entered a default judgment as to Rollins Air and Claudius Rollins, after which Rousseau filed a motion to dismiss for lack of personal jurisdiction. ( See Def.'s Mem. Supp. Cross Mot. Summ. J. at 5; Exs. 8, 9.) The court granted Rousseau's motion to dismiss. The Florida court later entered final judgment as to Rollins Air and Claudius Rollins, awarding 3 Eagles $837,860.46 plus interest until paid. ( See id. at 5; Ex. 8.) No final default judgment was entered against Rousseau. 3 Eagles has advanced no authority or legal theory to explain how res judicata can apply to a non-party to the original judgment such as Rousseau under these circumstances.
Defendant urges the Court to apply the holding of Bush v. Balfour Beatty Bahamas, Ltd., 62 F.3d 1319 (5th Cir. 1995) to this case. Bush does nothing to advance the defendant's position. In Bush, the district court entered a default judgment against the appellant after he repeatedly failed to produce discovery documents and failed to appear at a deposition and pretrial conference. See id. at 1321. The appellant did not object to the default judgment or the proposed final default judgment. See id. at 1322. The Eleventh Circuit held that when a party has substantially participated in litigation in which he had a full and fair opportunity to defend on the merits, but chose not to adequately defend on the merits, a court's final default judgment against him can be the basis for collateral estoppel. See id. at 1325. The court reasoned that the party could reasonably have foreseen the conclusive effect of his actions. See id.
Bush is distinguishable for many reasons but the most significant one is that Bush was a party to the final default judgment that his opponent sought to use against him in the second proceeding. The court had not dismissed Bush for lack of personal jurisdiction, as the Florida court did in Rousseau's case, without entering judgment against him.
For all the foregoing reasons, defendant may not avail itself of the doctrine of res judicata to apply the Florida judgment it obtained against Rollins Air and Claudius Rollins against Rousseau.
C. Choice of Law
It is well-settled that a federal court in a diversity case must apply the choice of law rules of the state in which the federal court sits. See Marchesani v. Pellerin-Milner Corp., 269 F.3d 481, 485 (5th Cir. 2001); New England Merchants National Bank v. Rosenfield, 679 F.2d 467, 471 (5th Cir. 1982); Petticrew v. ABB Lurrwnus Global, Inc. and Mobil Corp., 53 F. Supp.2d 864, 866-67 (E.D. La. 1999) (citing Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941)). This Court's decision as to choice of law is thus governed by the Louisiana Civil Code. See id. Article 3537 of the Code supplies the choice of law principle in the absence of a contractual choice of law clause: "Except as otherwise provided in this Title, an issue of conventional obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue." LA. Civ. CODE ANN. art. 3537 (West 2002). Article 3540 supplies choice of law doctrine when parties have agreed to a choice of law rule: "All other issues of conventional obligations are governed by the law expressly chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537." LA. CIV. CODE ANN. art. 3540 (West 2002).
The December Note contains a clause stating that the terms of the contract are to be construed and enforced under Florida law. ( See Def.'s Mem. Supp. Cross Mot. Summ. J. Ex. 3, § 19.) Because the parties have agreed to apply Florida law to construe and enforce the contract, this Court will apply Florida law unless doing so would seriously impair the public policy of the state whose law would otherwise be applicable under Article 3537. Under the following analysis, the Court concludes that, even in the absence of a choice of law provision, Florida law would be applicable under Article 3537.
Article 3537 and Article 3515 of the Louisiana Civil Code provide the following factors to consider in determining which state's laws should apply in the absence of a choice of law clause: (1) the relationship of the state to the parties and the dispute; (2) the contacts each state had with the parties and the transaction including where the contract was negotiated, formed, and performed; (3) the location of the domicile, residence, or business of the parties; (4) the nature, type, and purpose of the contract; and (5) the interest of facilitating "orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other." LA. CIV. CODE ANN. arts. 3537, 3515 (West 2002); Petticrew, 53 F. Supp.2d at 867.
In Petticrew, the court held that Texas had more significant contacts with the parties than did Louisiana, because the negotiation and execution of the contract took place in Texas. See Petticrew, 53 F. Supp.2d at 868. In LL Oil Company, Inc. v. Hugh Mac Towing Corp., 859 F. Supp. 1002 (E.D. La. 1994), the court held that Louisiana had a more significant interest in a guaranty dispute than did Florida, when the plaintiff was a Louisiana corporation, the defendant was a resident of Florida, the negotiation and formation of the contract was by facsimile and mail between Louisiana and Florida, the nature of the contract was a guaranty of payment from a Florida trust for purchase of Louisiana products from the defendant, deliveries were made in Louisiana, the effect of the guaranty was to facilitate performance of a Louisiana transaction, and payments were made to the defendant in Louisiana. See id. at 1004.
The relevant facts in this case point clearly toward the application of Florida law under the analysis in Petticrew and LL Oil. Rousseau is a Louisiana resident. He signed the December Note as a guarantor in Louisiana, then faxed it and mailed a hard copy to counsel for 3 Eagles in Florida. This is the extent of the parties' contacts with Louisiana. 3 Eagles is a Florida corporation. The December Note was executed in Florida. The airplanes were delivered in Florida. The guaranty was executed to facilitate performance of a Florida transaction. Payments were to be made and were received in Florida. Under these facts, Florida has more significant contacts with this dispute than does Louisiana. Under the rules set forth in Articles 3515, 3537, and 3540 of the Louisiana Civil Code, Florida is the state whose policies would be most seriously impaired if its laws were not followed. Because the parties contractually agreed that Florida law is to be applied to the December Note, the public policy of Florida obviously will not be impaired by applying Florida law.
D. Novation
Under Florida law, a novation is "a mutual agreement between the parties for the discharge of a valid existing obligation by the substitution of a new valid obligation." Jakobi v. Kings Creek Village Townhouse Ass'n, 665 So.2d 325, 327 (Fla. 3d Dist.Ct.App. 1995) (citing Ades v. Bank of Montreal, 542 So.2d 1013 (Fla. 3d Dist.Ct.App. 1989), rev. denied, 551 So.2d 460 (Fla. 1989)). A novation requires four essential elements: (1) the existence of a previously valid contract; (2) the agreement of the parties to cancel and extinguish the first contract; (3) the agreement of the parties that the second contract takes the place of the first; and (4) the validity of the new contract. See id. As in Jakobi, the first and fourth elements are clearly met in this case, evidenced by the properly signed and executed December Note and the February Amendment. See id. The second and third elements are at issue on the parties' cross-motions for summary judgment. For the following reasons, this Court finds that there is no evidence that the parties agreed to cancel and extinguish the first contract and to have the second contract take the place of the first.
In analyzing the second and third elements of the novation test, Florida law holds that the intent of the parties controls. See Miami National Bank v. Forecast Construction Corp., 366 So.2d 1202, 1204 (Fla. 3d Dist.Ct.App. 1979). Florida law also holds that the party pleading the novation as an affirmative defense has the burden of proving it by clear and convincing evidence. See id. (citing Baby, Inc. v. Baby's Formula Service, Inc., 165 So.2d 795 (Fla. 3d Dist.Ct.App. 1964)).
In Miami, the court found no novation when the defendant guarantor promised to pay in installments that which he was already obliged to pay, and the parties had not canceled the original note. See id. at 1204. In Tullis v. Benge, 473 So.2d 1384, 1386 (Fla. 1st Dist.Ct.App. 1985), the court found that a letter contemplating the acquisition of an account did not create a novation, because "a novation ordinarily contains a stipulation to extinguish the old agreement and its existence is controlled by the intention of the parties." Id. ( citing Taines v. Capital City First National Bank, 344 So.2d 273, 276 (Fla. 1st Dist. Ct. App. 1977).
In this case, as in Miami and Tullis, the guarantor, Rousseau, has presented no evidence that the parties intended for the February Amendment to cancel and extinguish the December Note and to have the February Amendment replace the December Note. On the contrary, there is clear evidence that the parties intended otherwise. First, the title of the February Amendment, "Amendment to Promissory Note Dated December 18, 1997," demonstrates the intent of the parties that the December Note was to remain in force. (Pl.'s Mem. Supp. Mot. Summ. J. Ex. 2.) Second, the Amendment provides, "It is to become a legal binding addendum to the original contract upon signatures of both parties." Id. This statement reflects the parties' clear intent that the February Amendment was not a substitute for the original note. Lastly, and most significantly, the February Amendment expressly provides that 3 Eagles "in no way relieves [Rollins Air] from existing obligations." Id. This last statement is conclusive that the parties intended the December Note to remain in effect.
The Court therefore GRANTS summary judgment for 3 Eagles and DENIES summary judgment for Rousseau on the issue of novation.
E. Material Alteration
Florida law recognizes that a guarantor may be released from his or her obligation to guarantee a debt if the principal debtor and creditor materially alter the terms of the original obligation without the guarantor's consent. See U.S. Home Acceptance Corp. v. Kelly Park Hills, Inc., 542 So.2d 463, 464 (Fla. 5th Dist.Ct.App. 1989) (citing Champion Home Builders, Inc. v. Highridge Sales, Inc., 472 So.2d 836 (Fla. 5th Dist.Ct.App. 1985)); Causeway Lumber Co., Inc. v. King, 502 So.2d 80 (Fla. 4th Dist.Ct.App. 1987); Miami National Bank v. Fink, 174 So.2d 38 (Fla. 3d Dist.Ct.App.), cert. denied, 180 So.2d 658 (Fla. 1965). See also 28 FLA. JUR. 2D Guaranty and Suretyship § 36 (West 2002). In cases in which the guarantor expressly agrees that his guaranty is unconditional, however, Florida courts have consistently enforced the guaranty, finding that the guarantor waived his right to object to alterations. See Equity Title, Inc. v. First National Bank Trust, 564 So.2d 1182, 1184-85 (Fla. 1st Dist.Ct.App. 1990) (enforcing guaranty despite creditor's extension of time for payment, when guarantor had expressly and unconditionally consented to extensions of time for payment); U.S. Home Acceptance Corp., 542 So.2d at 464-65 (same); Champion Home Builders, 472 So.2d at 837 (same); von Dunser v. Southeast First National Bank of Miami, 367 So.2d 1094, 1096 (Fla. 3d Dist.Ct.App. 1979) ( distinguished in Boneh, Inc. v. Daly, 743 So.2d 542, 543 (Fla. 3d Dist. Ct. App. 1999)) (holding that "under an absolute and unconditional contract of guaranty. . . it is no defense that the creditor has lost security or has been negligent in regard to protection of the collateral")
The December Note which Rousseau unconditionally guaranteed recited that guarantors waived all notices and agreed to unconditional liability regardless of whether the Note was extended or modified, or its collateral released:
Borrower and all endorsers, sureties and guarantors, hereby jointly and severally waive presentment for payment, demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this note, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this note, and they agree that each shall have unconditional liability without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Lender. Borrower and all endorsers, sureties, and guarantors consent to any and all extensions of time, renewals, waivers or modifications that may be granted by Lender with respect to the payment or other provisions of this Note, and to the release of any collateral or any part thereof, with or without substitution, and agree that additional borrowers, endorsers, guarantors, or sureties may become parties hereto without notice to them or affecting their liability hereunder.
(Def.'s Mem. Supp. Cross Mot. Summ. J. Ex. 3 § 10(b) (emphasis added).) This clause is almost identical to the guaranty clauses involved in the above-cited cases. Rousseau's guaranty appears on the last page of the Note itself and unconditionally guarantees all of the obligations of the Note.
For the foregoing reasons, this Court finds that Rousseau unconditionally consented to alterations to the December Note, such as extensions of time and release of collateral, and cannot now attempt to avoid his obligation as guarantor by claiming that he did not consent to such alterations. The Court therefore GRANTS summary judgment for 3 Eagles' and DENIES summary judgment for Rousseau on the issue of material alteration.
F. Ignorance of Contract Terms
The Court is aware that Rousseau said in his deposition that if he read the waiver clause of the Note, he did not understand it. ( See Pl.'s Complaint ¶ VIII; Rousseau Depo., attached to Def.'s Suppl. Mem. Supp. Cross Mot. Summ. J. Ex. A at 49.) This assertion does not change the result here. Rousseau was not unsophisticated and had served as a guarantor before this transaction. ( See Rousseau Depo. at 52-53.) In a case involving a guarantor's claim that he had not read an agreement and did not understand that he was being asked to guarantee payment, the Florida Court of Appeals stated:
It has long been held in Florida that one is bound by his contract. Unless one can show facts and circumstances to demonstrate that he was prevented from reading the contract, or that he was induced by statements of the other party to refrain from reading the contract, it is binding.Qubty v. Nagda, 817 So.2d 952, 958 (Fla. 5th Dist.Ct.App. 2002) (quoting Sabin v. Lowe's of Florida, Inc., 404 So.2d 772, 773 (Fla. 5th Dist.Ct.App. 1981) ("A party has a duty to learn and know the contents of a proposed contract before he signs and delivers it and is presumed to know and understand its contents, terms and conditions."); see also Snelling and Snelling, Inc., et al. v. Reynolds, MTX, Inc., et al., 140 F. Supp.2d 1314, 1322 (M.D. Fla. 2001)
Rousseau points to no evidence that he was prevented from or induced not to read the contract. The terms of the Note and guaranty are clear. Rousseau has no defense based on any asserted failure to read or understand the contract.
III. AMOUNTS DUE
The Court GRANTS summary judgment for 3 Eagles on all claims. Accordingly, 3 Eagles is entitled to receive from Rousseau all principal, accrued interest, and late fees that have accumulated on the debt contained in the December Note. 3 Eagles has produced a report made by a Certified Public Accountant setting forth these amounts as of June 24, 2002 as $1,341,462.14 plus interest at the rate of $556.44 per diem. ( See Def.'s Suppl. Mem. Supp. Cross Mot. Summ. J. Ex. C.) Rousseau has not raised an issue of fact to dispute the amounts due under the Note and guaranty.
Accordingly, the Court ORDERS Wayne Rousseau to pay 3 Eagles the amount of $1,341,462.14 as of June 24, 2002, plus interest at the rate of $556.44 per diem.
Additionally, 3 Eagles asks the Court to award its attorney's fees and costs. The December Note provides as following concerning the payment of attorney's fees:
If Lender engages any attorney to enforce or construe any provision of this note or the mortgage, or as a consequence of any default whether or not any legal action is filed, Borrower shall immediately pay on demand all reasonable attorneys' fees and other Lender's costs, together with interest from the date of demand until paid at the highest rate of interest then applicable to the unpaid principal, as if such unpaid attorneys' fees and costs had been added to the principal.
(Def.'s Mem. Supp. Cross Mot. Summ. J. Ex. 3 § 9.) The guarantee clause does not specifically mention the award of attorney's fees for enforcing the guaranty.
Under Florida law, the availability of attorney's fees depends on the agreements between the parties. See Cacciatore v. Fisherman's Wharf Realty Ltd. Partnership, 778 So.2d 1076, 1077 (Fla. 4th Dist.Ct.App. 2001); MSI Financial Group, Inc. v. Veterans Construction Corp., 645 So.2d 178, 179 (Fla. 3d Dist.Ct.App. 1994); Kim v. Peoples Federal SL Ass'n, 538 So.2d 867, 869-70 (Fla. 1st Dist.Ct.App. 1989); Holcomb v. Bardill, 214 So.2d 522 (Fla. 4th Dist.Ct.App. 1968). Generally,
the guarantor is not liable for attorney's fees and costs in connection with an action to enforce a guaranty where there is no express provision in the guaranty for such liability, but where the contract provides only for payment of attorney's fees and costs in connection with proceedings to collect on the note.Kim, 538 So.2d at 869-70 ( quoted in MSI Financial Group, 645 So.2d at 179). In denying attorney's fees, the Kim court held that neither the note nor the guaranty provided for attorney's fees for enforcement of the guaranty. The court did not quote the relevant contractual language, but it stated that the attorney's fees clause before it differed from the clause in Holcomb, in which attorney's fees had been granted. The Holcomb note provided:
In the event this note is placed in the hands of an attorney for collection, or in case the holder shall become a party either as plaintiff or as defendant in any suit or legal proceeding in relation to the property described or the lien created in the mortgage securing payment of this indebtedness or for the recovery or protection of said indebtedness, the maker hereof will repay on demand all costs and expense arising therefrom, including reasonable attorney's fees, with interest thereon at the rate of 10 percent per annum until paid.Id. at 523. In Holcomb, the appellate court reversed the trial court's ruling which denied attorney's fees on plaintiff's suit to enforce a guaranty. See id. at 523-24. The Florida Court of Appeals stated that the provision in the note pertaining to attorney's fees was "broad enough to include not only suit for collection on the note, but also any litigation involving the holder either as plaintiff or defendant in relation to the property or for the recovery or protection of the indebtedness." Id. at 524.
In this case, the contractual language pertaining to attorney's fees is broad, like the clause in Holcomb. The borrower is liable for attorney's fees "if Lender engages any attorney to enforce or construe any provision of this note or the mortgage, or as a consequence of any default, whether or not any legal action is filed." 3 Eagles has engaged an attorney to enforce provisions of the December Note as a consequence of the default by Rollins Air, and it has incurred fees to pursue Rousseau as a result of the default by Rollins Air. Because Rousseau unconditionally guaranteed all of the obligations of Rollins Air in the December Note, if Rollins Air is liable for attorney's fees, Rousseau is liable as a guarantor. The Court finds that Rollins Air would be liable for the attorney's fees incurred by 3 Eagles in suing on the Rousseau guaranty because the lender incurred these fees as a consequence of Rollins Air's default. Accordingly, Rousseau is liable for attorney's fees in this action.