Title: JPMORGAN CHASE BANK, N.A. v. SPECIALTY RESTAURANTS, INC.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

JPMORGAN CHASE BANK, N.A. v. SPECIALTY RESTAURANTS, INC.  JPMORGAN CHASE BANK, N.A. v. SPECIALTY RESTAURANTS, INC. 2010 OK 65 Case Number: 106289 Decided: 09/21/2010 THE SUPREME COURT OF THE STATE OF OKLAHOMA NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL. JPMORGAN CHASE BANK, N.A., Plaintiff/Appellant, v. SPECIALTY RESTAURANTS, INC.; PAUL KRETH; JAMES VALLION; and THE JAMES VALLION TRUST, Defendants/Appellants. CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION III ¶0 The plaintiff/appellant, JPMorgan Chase Bank (mortgagee/Chase/Bank), loaned the defendant/respondent, Specialty Restaurants, Inc. (restaurant/mortgator), monies to purchase property for a restaurant. The mortgage was secured by the property and by guarantees from the defendants/appellants, Paul Kreth (Kreth) and James Vallion and the James Vallion Trust (Vallion) (collectively, guarantors). The restaurant failed and Chase filed a foreclosure action. Judgment was entered against the mortgagor and the guarantors for approximately $1.7 million and the property was disposed of at a sheriff's sale. Chase purchased the property for $750,000.00. The sale was confirmed. The Bank filed a motion for deficiency judgment. Although Chase asserted that the guarantors were entitled to a credit to their debt of only the proceeds from the sale of the property, the district court credited the money judgments $1.5 million, the fair and reasonable market value as determined in a hearing conducted pursuant to CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS' OPINION VACATED; TRIAL COURT AFFIRMED IN PART, REVERSED IN PART, AND CAUSE REMANDED. Joel W. Harmon, T.P. Howell, DAY, EDWARDS, PROPESTER & CHRISTENSEN, P.C., Oklahoma City, Oklahoma, for Plaintiff/Appellant, Russell L. Mullinix, Amy G. Piedmont, Armando J. Rosell, MULLINIX, OGDEN, HALL, ANDREWS & LUDLAM, P.L.L.C., Oklahoma City, Oklahoma, for Defendants/Appellees, Specialty Restaurants Inc. and Paul Kreth, Conner L. Helms, Erin M. Moore, HELMS & UNDERWOOD, Oklahoma City, Oklahoma, for Defendants/Appellees, James Vallion and the James Vallion Trust. WATT, J.: ¶1 We granted certiorari to address a single issue: whether, after foreclosure, the guarantors FACTUAL AND PROCEDURAL HISTORY ¶2 Early in 2000, Chase loaned the restaurant $1,750,000.00 to purchase real estate and equipment for a restaurant. The loan was secured by a mortgage and by two guaranty agreements. Initially, Kreth and Vallion entered identical guaranty agreements waiving any and all rights given to guarantors at law or in equity other than actual payment and agreeing not to assert or make any claim of setoff. ¶3 Vallion transferred a number of assets to the James Vallion Trust including the restaurant property. Thereafter, Chase required Vallion to execute a second guaranty agreement ¶4 Upon default, Chase filed a foreclosure suit in 2005 receiving summary judgment in its favor. The judgment was affirmed and the property was sold at sheriff's sale in December of 2006 to Chase for $750,000.00. The sale was confirmed at a hearing on January 5, 2007. Chase filed a motion for deficiency judgment asking that the restaurant and the guarantors be given credit for the sheriff's sale price of $750,000.00. Later, Chase filed a "clarification" in the cause indicating that the mortgagor was entitled to credit for the fair and reasonable value of the property as determined by the trial court. Nevertheless, the bank asserted the guarantors could only benefit from the $750,000.00 actually paid for the property at the sheriff's sale. ¶5 On March 15, 2007, the trial court announced its judgment. It found the fair and reasonable value of the mortgaged property to be $1,500,000.00. The trial court determined that the guarantors were entitled to a credit on the judgment of the fair market value of the property, $1,500,000.00, rather than the sale price of $750,000.00. Chase appealed alleging that the determination of the fair market value of the property was too high and that the guarantors waived any rights of setoff based on a fair and reasonable market value determination. The Court of Civil Appeals affirmed on March 12, 2010. We granted certiorari on May 25, 2010 to consider the sole issue presented: whether, after foreclosure, the guarantors' obligation should be credited with the court-determined fair and reasonable market value of the property? ¶6 The plain, clear, unmistakable, unambiguous, and unequivocal language of the respective guaranty agreements is sufficient to waive the right of a fair and reasonable market value setoff to the guarantors' debts. ¶7 Chase argues that the guaranty agreements waived all rights of the guarantors to setoffs for the adjudicated fair and reasonable market value of the property. Both the restaurant and Kreth assert that a credit of the judicially determined fair market value of the property is appropriate pursuant to Construction of guaranty contracts. ¶8 Before looking at the precise language of the guaranty contracts, it is helpful to review the rules of construction governing such agreements. ¶9 The parties' intent in executing a guaranty contract is gathered from the entire instrument. The Kreth guaranty agreement. ¶10 The original guaranty agreements signed by Kreth and Vallion on February 15, 2000 provide in pertinent part: ". . . GUARANTOR'S WAIVERS . . . Guarantor waives any and all rights or defenses arising by reason of . . . (d) any defense given to guarantors at law or in equity other than actual payment and performance of the indebtedness. . . . Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. . . ." ¶11 Specialty and Kreth assert that the guaranty agreement's failure to contain specific references to the waiver of protections contained in the statutes governing guaranty agreements, i.e. ¶12 The guaranty agreement Kreth executed specifically provides that, as guarantor, Kreth waived any and all ¶13 The plain, clear, unmistakable, unambiguous, and unequivocal language of the Kreth guaranty agreement waived "any and all" rights of any setoff to the guarantors' debts other than actual payment. That being the case, Kreth is not entitled to a reduction in his obligation to Chase in the amount of $1,500,000.00, the judicially determined fair and reasonable market value of the property. The Vallion guaranty agreement. ¶14 Vallion signed a second guaranty agreement after creating a trust and transferring his interest in the restaurant property into the same. Vallion signed the second guaranty contract on September 21, 2004. It provides in pertinent part: Guarantor waives and agrees not to assert ¶15 Vallion insists that the quoted language from the guaranty agreement is insufficient to waive his right to receive credit for the fair and reasonable market value of the real property. The contention is simply not credible. ¶16 The term "any" is all-embracing and means nothing less than "every" and "all."32 Utilization of the word "including" along with the phrase "without limitation" denotes an intention of non-exclusivity.33 The term "including" is neither limiting nor exclusive.34 ¶17 The guaranty contract provides that it waives the benefits of "any" statutory provision limiting the liability of a surety, including "without limitation" several specific statutory references. It goes on to utilize the same language in relation to ¶18 The Vallion guaranty agreement specifically waived the right to setoff contained in CONCLUSION ¶19 A guarantor's obligation is contractual. Therefore, in each case, we focus on the precise terms of the guarantor's undertaking, the dimension or breadth of the promise made. ¶20 The Bank successfully negotiated terms in its favor. Doing so does not render the contract unenforceable for public policy reasons. We hold that the plain, clear, unmistakable, unambiguous, and unequivocal language of the Kreth and Vallion guaranty agreements is sufficient to waive the right to a fair and reasonable market value setoff of the guarantors' liability. The cause is affirmed as to its conclusion regarding the restaurant's entitlement to a credit for the fair and reasonable market value of the property against the deficiency judgment entered. The cause is reversed and remanded for an entry of judgment against the guarantors consistent with this opinion. CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS' OPINION VACATED; TRIAL COURT AFFIRMED IN PART, REVERSED IN PART; AND CAUSE REMANDED. EDMONDSON, C.J., TAYLOR, V.C.J., HARGRAVE, OPALA, WATT, WINCHESTER, JJ., concur. COLBERT and REIF, JJ., dissent. KAUGER, J., not participating. FOOT