United States District Court, D. Arizona
V. Wake Senior United States District Judge
Franchise Finance Commercial LLC (“GE Franchise”)
seeks to hold Hollis and Sidney Wormsby liable as guarantors
of a defaulted loan. Before the Court is GE Franchise’s
Motion for Summary Judgment (Doc. 36) and the parties’
accompanying statements of facts and briefs. For the reasons
that follow, the Motion will be granted.
motion for summary judgment tests whether the opposing party
has sufficient evidence to merit a trial. Summary judgment
should be granted if the evidence reveals no genuine dispute
about any material fact and the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a). A material
fact is one that might affect the outcome of the suit under
the governing law, and a factual dispute is genuine “if
the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
movant has the burden of showing the absence of genuine
disputes of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). However, once the movant shows an
absence of evidence to support the nonmoving party’s
case, the burden shifts to the party resisting the motion.
The party opposing summary judgment must then “set
forth specific facts showing that there is a genuine issue
for trial” and may not rest upon the pleadings.
Anderson, 477 U.S. at 256. To carry this burden, the
nonmoving party must do more than simply show there is
“some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986).
deciding a motion for summary judgment, the Court must view
the evidence in the light most favorable to the nonmoving
party, must not weigh the evidence or assess its credibility,
and must draw all justifiable inferences in favor of the
nonmoving party. Reeves v. Sanderson Plumbing Prods.,
Inc., 530 U.S. 133, 150 (2000); Anderson, 477
U.S. at 255. Where the record, taken as a whole, could not
lead a rational trier of fact to find for the nonmoving
party, there is no genuine issue for trial.
Matsushita, 475 U.S. at 587.
Loans, guaranty, and default
Franchise’s Statement of Facts (Doc. 37) recounts as
16, 2008, GE Franchise made two loans to Little Giant
Enterprises, LLC.The first loan was documented in an
agreement labeled “Contract No. 15341001, ” which
the parties refer to as the “1001 Loan
Agreement.” (Doc. 37-2 at 2-51.) That loan was for $2,
324, 595, plus interest. The second loan was documented in an
agreement labeled “Contract No. 15341002, ” which
the parties refer to as the “1002 Loan
Agreement.” (Id. at 52-86.) That loan was for
$2, 223, 405, plus interest.
Wormsbys are members of Little Giant Enterprises. On the day
the loans were made, they signed a written guaranty. At the
bottom of each page were the words “Contract No.
15341001.” (Doc. 37-3 at 2-8.) The second paragraph
referred to a loan of $2, 324, 595. (Id. at 2.) This
guaranty will be hereafter referred to as the “1001
Guaranty.” This is the only guaranty attached to GE
Franchise’s Statement of Facts.
1, 2015, GE Franchise notified Little Giant Enterprises and
the Wormsbys that the loans were in default. Later that
month, Little Giant Enterprises filed for bankruptcy. In
October 2015, the bankruptcy court auctioned off
substantially all of Little Giant Enterprises’ assets
for $1, 000, 000. That amount (minus the costs of sale) was
applied to the debt owed to GE Franchise. In December 2015,
additional collateral was sold for $15, 500, which was also
applied to the debt owed to GE Franchise.
Lawsuit and revelation of a second guaranty
Franchise filed this action against the Wormsbys on September
24, 2015. (Doc. 1.) It claims the Wormsbys guaranteed the
1001 Loan Agreement and the 1002 Loan Agreement. It further
claims that as of January 31, 2016, the Wormsbys owed $495,
356.24 pursuant to those agreements, consisting of: (1) $334,
011.40 of principal, (2) $52, 529.98 of interest, (3) $13,
236.06 in late charges, and (4) $95, 578.80 in fees incurred
in the bankruptcy case. Accordingly, it moves for summary
judgment in this amount, plus further interest accrued and
fees and costs incurred in this matter. (Doc. 36.)
their response, the Wormsbys raise only one objection. (Doc.
40.) They say the 1001 Guaranty applies only to the 1001 Loan
Agreement, not the 1002 Loan Agreement. They point out that
the guaranty identifies only one loan-$2, 324, 595-and refers
to only one loan agreement-Contract No. 15341001. In
addition, Sidney Wormsby says he had a discussion with the
lender about the different purposes and interest rates of the
two loans. Based on this discussion and the ...