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GE Franchise Finance Commercial LLC v. Wormsby

United States District Court, D. Arizona

August 8, 2016

GE Franchise Finance Commercial LLC, Plaintiff,
v.
Hollis Wormsby, an individual; and Sidney Vernal Wormsby, an individual, Defendants.

          ORDER

          Neil V. Wake Senior United States District Judge

         GE 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.

         I. LEGAL STANDARD

         A 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).

         The 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).

         In 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.

         II. MATERIAL FACTS

         A. Loans, guaranty, and default

         GE Franchise’s Statement of Facts (Doc. 37) recounts as follows:

         On July 16, 2008, GE Franchise made two loans to Little Giant Enterprises, LLC.[1]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.

         The 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.

         On May 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.

         B. Lawsuit and revelation of a second guaranty

         GE 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.)

         In 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 ...


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