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Republic Bank v. Carlson

Court of Appeals of Minnesota

July 8, 2013

Republic Bank, as successor to First Commercial Bank, Respondent,
v.
Virginia M. Carlson, et al., Appellants, Michael Leuer, et al., Defendants, and Sundblad Construction, Inc., Intervenor, and James Fenning, Third Party Plaintiff, Land Title, Inc., Third Party Defendant.

UNPUBLISHED OPINION

Hennepin County District Court File No. 27-CV-09-29874

Donald R. McNeil, Jeffrey Scott, Heley, Duncan & Melander, PLLP, Minneapolis, Minnesota (for respondent).

Bennett Hartz, Jonathan L. R. Drewes, Michael James Wang, Drewes Law, PLLC, Minneapolis, Minnesota (for appellants)

Considered and decided by Peterson, Presiding Judge; Chutich, Judge; and Smith, Judge.

PETERSON, Judge

In this appeal from a partial summary judgment, appellant-guarantors argue that the district court erred in upholding the terms of a guaranty that permitted respondent-bank to extend the terms of underlying loans by three months. We affirm.

FACTS

This appeal is brought by husband-and-wife guarantors Virginia and Philip Carlson, who claim that the district court erred by granting partial summary judgment to First Commercial Bank, predecessor to respondent Republic Bank, asserting that the bank lacked authority to extend the payment period of an individual guaranty[1] executed by the Carlsons to cover a loan made by the bank. In 2006, the bank had agreed to finance an office-condominium construction project in Orono known as the Amber Woods Office Centre, LLC. Over the next two years, Amber Woods obtained three loans to finance the project, and individual investors, including the Carlsons and three other individuals, all of whom had various ownership interests in Amber Woods, signed personal guaranties to secure the loans. The guaranty for the first loan to Amber Woods is the subject of this appeal.

For the first loan, Amber Woods executed a mortgage and note in favor of the bank for $3, 869, 380. The loan was to be repaid by September 28, 2008. Carlsons and the other investors executed identical personal guaranties on September 28, 2006, to ensure payment on the first note. The Carlsons' guaranty provides:

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. . . . Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.
INDEBTEDNESS. . . . "Indebtedness" includes, without limitation, . . . transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several or joint and several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason . . .; and originated then reduced or extinguished and then afterwards increased or reinstated.
If Lender presently holds one or more guaranties, or hereafter receives additional guaranties from Guarantor, Lender's rights under all guaranties shall be cumulative. This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor's liability will be Guarantor's aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.
CONTINUING GUARANTY. THIS IS A 'CONTINUING GUARANTY' UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUALPAYMENT, PERFORMANCEAND SATISFACTION OF THE INDEBTEDNESS OF BORROWER TO LENDER, NOW EXISTING OR HEREAFTER ...

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