A Guaranty May Be Enforceable Even If Collection Of The Underlying Debt Is Barred

by Nutter McClennen & Fish LLP

In Cedar-Fieldstone Marketplace, LP v. T.S. Fitness, Inc., the Massachusetts Appeals Court considered whether a release of a landlord’s claims against a tenant for unpaid rent precluded the landlord from bringing a collection action against the guarantor of the lease. The court held that the landlord was not precluded from seeking payment from the guarantor for unpaid rent.

T.S. Fitness, Inc. (“Tenant”) rented commercial property from Cedar-Fieldstone Marketplace, LP (“Landlord”) in New Bedford, Massachusetts. To secure Tenant’s payment obligations under the lease, the president of Tenant (“Guarantor”) executed a personal guaranty. Tenant defaulted, and Landlord brought a summary process action against it in District Court. The action was resolved through an agreement for judgment (the “Agreement”). The Agreement allowed Tenant to continue to occupy the premises for three months and to make monthly use and occupancy payments. After three months, Tenant was to vacate the premises. Guarantor was not a party to that Agreement.

Landlord brought a collection action in Superior Court against Tenant and Guarantor seeking unpaid rent. A Superior Court judge held that the Agreement barred Landlord’s claim against Tenant. A second Superior Court judge ruled on summary judgment that Landlord’s count against Guarantor, however, was not barred. Guarantor appealed, arguing that he could not be liable under the Guaranty because Tenant’s underlying liability was resolved by the Agreement.

The court was unpersuaded by Guarantor’s argument. The court stated that it saw “no legal bar to a guarantor’s agreeing—as part of the negotiated terms of a guaranty—that his obligation to fund the underlying debt would survive a settlement of that debt between the principal obligor and the recipient of the guaranty.” As such, the court looked to the terms of the guaranty to determine the intent of the parties.

The court considered several aspects of the guaranty in analyzing the intent of the parties. First, the court noted that it was an absolute and unconditional guaranty, that Guarantor’s liability was joint and several, and that there were no procedural actions Landlord had to take as a precondition to seeking recovery from Guarantor. Next, the court highlighted language in the guaranty that stated that the liability of Guarantor would not be diminished or modified by any consent or release between Landlord and Tenant. Finally, the court emphasized that the guaranty stated that Landlord’s rights “are intended to be distinct, separate and cumulative and no exercise or partial exercise of any such right or remedy therein or herein mentioned is intended to be in exclusion of or a waiver of any of the others.”

The court held that the express terms of the guaranty were clear: the guaranty intended to provide Landlord a means for collecting unpaid rent, and the rights of Landlord against Guarantor were independent of its rights to collect unpaid rent from Tenant. Accordingly, Landlord was entitled to collect from Guarantor. 

This case highlights important aspects in both drafting and enforcing a guaranty. To the extent a guaranty clearly provides that the guarantor’s obligations are not affected by a release of the principal obligor, and the agreement releasing the principal obligor does not suggest otherwise, the guaranty should remain enforceable.

This advisory was prepared by Juliaana DiGesu and Beth Mitchell, members of Nutter’s Real Estate Department.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Nutter McClennen & Fish LLP | Attorney Advertising

Written by:

Nutter McClennen & Fish LLP

Nutter McClennen & Fish LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.