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Broadbent v. Fifth Third Bank

Court of Appeals of Indiana

August 31, 2016

George P. Broadbent, and Plainfield Village, LP, Appellants-Defendants,
v.
Fifth Third Bank, Appellee-Plaintiff.

         Appeal from the Hendricks Superior Court The Honorable Rhett M. Stuard, Judge Trial Court Cause No. 32D02-1408-MF-307

          ATTORNEYS FOR APPELLANT Paul T. Deignan R.C. Richmond, III Taft Stettinius & Hollister LLP Indianapolis, Indiana.

          ATTORNEYS FOR APPELLEE Jay Jaffe Brian J. Paul Faegre Baker Daniels LLP Indianapolis, Indiana.

          KIRSCH, JUDGE. [1]

         [1] George P. Broadbent ("Broadbent" or "Guarantor") appeals the trial court's entry of summary judgment in favor of Fifth Third Bank ("the Bank" or "Lender"). He raises two issues on appeal, which we restate as:

I. Whether the trial court erred when it determined that the two payment guaranties that Broadbent signed were not ambiguous; and
II. Whether the trial court properly calculated Broadbent's liability under the guaranties.

         [2] We affirm.

         Facts and Procedural History

         [3] This case stems from two loans that the Bank issued to Plainfield Village, LP ("Plainfield Village" or "Borrower") for purposes of real estate development, namely the construction of a shopping center. On June 30, 2006, the Bank loaned Plainfield Village the following amounts: (1) $7, 450, 000.00 ("Construction Loan") and (2) $1, 307, 000.00 ("Additional Loan") (together, "the Loans" or "the Notes"). Both Loans were backed by collateral, including a mortgage on real estate, which Plainfield Village gave to the Bank. Broadbent, who was president of Plainfield Village, executed a Payment Guaranty[2] ("Guaranty" or together, "Guaranties") for each of the Loans. The original maturity date of the Loans was June 30, 2009, but in June 2009, the maturity date of the Loans was extended to June 30, 2014 ("Extended Maturity Date"). Broadbent reaffirmed his Guaranties in writing in 2011 and 2013.

         [4] Section 1 of the Guaranties provides that Broadbent guarantees the prompt payment and performance when due, whether by acceleration or otherwise, of "Liabilities, " which term refers to the principal amounts of the two Loans, accrued interest on the Loans, and obligations under the related documents ("Loan Documents"), including the Loan Agreements, Mortgages and Security Agreements, Notes, and Assignment of Rents and Leases. Section 2 of the Guaranties identifies what happens in the event of default on the Liabilities. It states, in part:

2. LIABILITIES GUARANTEED. Subject to Section 7 below, in the event the Borrower fails at any time to pay any part or all of the Liabilities guaranteed when due, whether by acceleration or otherwise, the Guarantor, upon written demand of Lender, will pay or perform the Liabilities guaranteed in the same manner as if they constituted a direct and primary obligation of the Guarantor, and such obligation of the Guarantor shall be due with costs of collection, reasonable attorneys' fees and without relief from valuation or appraisement laws.

Appellant's App. at 209, 217. Section 7 of the Guaranties, which is referenced in Section 2, conditionally limits Broadbent's liability and provides:

7. LIMITATION. Notwithstanding anything to the contrary herein contained, upon the extension of the Loan[s] to the [Construction Loan and Additional Loan] Extended Maturity Date[s] in accordance with the terms of the Loan Agreement, the obligations of Guarantor herein shall be limited to fifty percent (50%) of the outstanding balance of principal and accrued interest under the Note; provided, however, Guarantor agrees that any reduction of the Liabilities whether prior to or after the occurrence of an Event of Default[3] (as defined in the Loan Agreement) shall be applied first to that portion of the Liabilities not guaranteed by Guarantor hereunder.

Id. at 213, 221.

         [5] Plainfield Village failed to repay the entire outstanding balance of principal and interest by July 10, 2014 (ten days after the Extended Maturity Dates), and on August 15, 2014, the Bank sent written notice of default ("the Default Letter") to Plainfield Village and Broadbent. Id. at 229. In the Default Letter, the Bank demanded payment in full of all of Plainfield Village's Liabilities. On August 27, 2014, the Bank brought a lawsuit against both Plainfield Village and Broadbent. The Bank asserted four claims: one for breach of the loan documents, two for foreclosure on a mortgage and certain security interests, and one for breach of the Guaranties. Id. at 32-37.

         [6] In November 2014, the Bank moved for summary judgment on all claims against Plainfield Village and Broadbent. In support of its motion, the Bank designated the affidavit of Matthew Kirchner ("Kirchner Affidavit"), a vice president of the Bank who had "primary responsibility for the collection of amounts owed by Plainfield Village and Broadbent." Appellee's Supp. App. at 1. Attached to the Kirchner Affidavit were various documents, including the Loan Agreements, Construction Note, Additional Note, Mortgage, Assignment of Rents, Contract Assignment, Financing Statements, Broadbent's Guaranties, and the Default Letter. The Kirchner Affidavit stated that, as of August 21, 2014, Plainfield Village owed the Bank the following amounts:

Construction Note

Additional Note

Unpaid Principal Balance:

$6, 185, 691.93

$1, 164, 500.30

Accrued and Unpaid Interest:

$25, 431.43

$4, 492.33

Subtotal:

$6, 211, 123.36

$1, 168, 992.63

Id. at 6. Thus, the total amount due under the Loan Documents was $7, 380, 115.99, plus daily-accruing interest on both the Construction Loan and Additional Loan. In March 2015, Broadbent filed a brief in opposition to the Bank's motion for summary judgment, along with an affidavit of Broadbent ("Broadbent Affidavit").[4] Appellant's App. at 5-6, 231. In May 2015, the trial court held a hearing and took the matter under advisement.

         [7] In or around June 2015, a buyer was found for the subject real estate, and all parties agreed that the property would be sold for not less than $3.55 million and further agreed that the trial court should approve the sale. Therefore, on June 30, 2015, the court-appointed receiver over the Plainfield Village property filed an agreed motion ("Sale Motion") to sell the shopping center. The Sale Motion set forth an agreement ("Consent Agreement") between Broadbent and the Bank that provided:

(e) . . . notwithstanding the actual dollar recoveries [the Bank] receives from the proceeds of the Sale of the Property, [the Bank] will credit the outstanding indebtedness owed to [the Bank] from Plainfield Village, LP and more specifically described in the Complaint as if [the ...

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