Guaranty Claims

News & Analysis as of

Bank's Decision To Draw From Letter of Credit Does Not Extinguish Entire Debt Because Debt Was Clearly Not Paid In Full

In this breach of commercial guaranty decision, the Court of Appeals reversed the trial court's grant of a motion for nonsuit in favor of the guarantors. The basis for the reversal was that the lender's draw on a letter of...more

Nevada Supreme Court Determines That a Pre-Foreclosure Guaranty Complaint Is Not a Deficiency “Application”

In what the dissenting Justices insinuate is an elevation of form over substance, the Nevada Supreme Court denied a rehearing in Lavi v. Eighth Judicial District Court, 130 Nev. Adv. Op. 38, 2014 WL 2428749 (May 29, 2014),...more

Unmitigated Waivers: Guarantors Remain Liable Despite 4-Year Delay in Foreclosure Sale

If a lender delays foreclosure allowing years of default interest to accrue such that a guarantor’s obligation increases from $6 million to $12 million, should the guarantor remain on the hook for the full $12 million? In...more

Council of the EU Adopts Recast Deposit Guarantee Schemes Directive

On March 3, the Council of the EU published a press release announcing that it has adopted at first reading the proposed Directive recasting the Deposit Guarantee Schemes Directive (94/19/EC). On February 25, the...more

California Court Rejects “Sham Guaranty” Defense; Enforces Guaranty

The “sham guaranty” defense may absolve a guarantor of liability when no deficiency is available against the borrower, and the guarantor is really the borrower with a different name. In California Bank and Trust v. Lawler...more

Guarantor's "Sham Guaranty" Defense Harder To Prove

A recent case has reaffirmed lenders’ ability to require personal guarantees from principals of borrowing entities. In California Bank & Trust v. Lawlor, a California appellate court considered the enforceability of...more

Loan Guarantors Fail To Establish Sham Guaranty Defense to Avoid Commercial Loan Obligations

A California appellate court recently found that despite the unity of ownership between a defendant's entities used for purposes of borrowing money in a commercial loan transaction, the debtor could not rely on the "sham...more

ECOA Now Growing Fangs In North Carolina

In my last article, “ECOA Gets More Teeth in North Carolina,” I wrote about the recent North Carolina Court of Appeals decision, RL Regi North Carolina, LLC v. Lighthouse Cove, LLC,…,and Connie S. Yow (COA12-1279). As...more

Judicial Reference Provision in Loan Guaranty Held Enforceable

Many of the loan documents we draft or seek to enforce contain an alternative dispute resolution provision requiring that borrower or guarantor disputes be tried by a judicial referee appointed by the Superior Court. This...more

California Court of Appeal Strictly Enforces Carveout Guaranty

In “what appears to be an issue of first impression, not only in California, but in the entire country,” the California Court of Appeal in Series AGI West Linn of Appian Group Investors De LLC v. Eves (June 14, 2013)...more

Illinois Supreme Court to Decide Interplay Between Dram Shop Act and Insurance Guaranty Fund Act

In the final days of the Illinois Supreme Court's recently concluded May term, the Court allowed petitions for leave to appeal in five new civil cases. Today, we begin our detailed previews of those cases, discussing the...more

U.S. Bank, Nat’l Ass’n v. Lightstone Holdings, LLC (N.Y. App. Div. Feb. 14. 2013) -- Senior Lender Gets Second Chance to Assert...

A recent decision in the protracted litigation by lenders of Extended Stay to recover under guaranties executed by owners of Extended Stay highlights the need for clear and unambiguous drafting in intercreditor agreements....more

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