UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: FAIRFAX MEDICAL CENTER

ASSOCIATES II,

Debtor.

FTD, L.C.,

Plaintiff-Appellant,

v.

PETER BERNAD; WILLIAM L. GLOVER;

CHARLES D. KIRKSEY; MOHAMMED R.

MOINFAR; WILLIAM C. SILBERMAN;

BAIKUTH SINGH; COMMERCIAL

CONDOMINIUM MANAGEMENT

No. 96-2254

COMPANY, INCORPORATED; FAIRFAX

NURSING CENTER, INCORPORATED;

NORTHERN VIRGINIA GYNECOLOGISTS

INVESTORS, G.P.; FAIRFAX NURSING

CENTER OFFICE LIMITED PARTNERSHIP,

d/b/a Fairfax Nursing Center Office,

Ltd.,

Defendants-Appellees,

and

JOSEPH BALLO; MIGUEL H. GONZALEZ;

BRIAN C. CAMPDEN-MAIN; MARY L.

SARA,

Defendants.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Leonie M. Brinkema, District Judge.

(CA-96-1112-A, BK-95-15403-DOT, AP-96-1004-DOT)
Argued: June 4, 1997

Decided: September 2, 1997

Before WILLIAMS and MICHAEL, Circuit Judges, and

BUTZNER, Senior Circuit Judge.

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Reversed and remanded by unpublished per curiam decision.

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COUNSEL

ARGUED: Deborah Jean Israel, SILVERSTEIN & MULLENS,

P.L.L.C., Washington, D.C., for Appellant. David J. McClure,

HIRSCHKOP & ASSOCIATES, P.C., Alexandria, Virginia, for

Appellees. ON BRIEF: William M. Harvey, SILVERSTEIN &

MULLENS, P.L.L.C., Washington, D.C., for Appellant. Philip J.

Hirschkop, HIRSCHKOP & ASSOCIATES, P.C., Alexandria, Virginia; John D. Steffan, STEFFAN & ASSOCIATES, P.C., Fairfax,

Virginia, for Appellees.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

Plaintiff (and appellant) FTD, L.C., brought suit against defendants

Peter Bernad and others, alleging that the defendants breached their

guaranties on a note now held by FTD. At issue is whether the defendants, who are all partners in the now-bankrupt Fairfax Medical Center Associates II General Partnership (the Partnership), are liable

under the note for the outstanding principal. The defendants contend

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that the guaranties limited their liability on the note to interest, real

estate taxes, and insurance premiums, while FTD contends that the

guaranties also cover the principal sum. The bankruptcy court agreed

with the defendants and granted summary judgment against FTD. The

district court affirmed. We conclude, however, that the meaning of

the guaranties is ambiguous, and we therefore reverse and remand to

the district court for trial.

I.

As its name might indicate, the Fairfax Medical Center Associates

II General Partnership was formed by the partners, primarily medical

doctors, to hold and manage medical office buildings located in Fairfax, Virginia. In 1987 the Partnership obtained a $5.9 million loan

from Old Stone Bank to finance a second medical office building.1

The loan was secured by a deed of trust on the building. The Partnership executed the Promissory Note, and the partners executed individual guaranties. Eleven of the twelve partners executed guaranties

which provided as follows:

1. Subject to the limitations set forth below, Guarantors

guarantee to Lender the prompt, absolute, and unconditional

payment of the principal sum disbursed under and evidenced

by the Note together wi[th] all interest thereon . . . and any

and all sums of money which, at any time, may become due

and payable under the provisions of the Deed of Trust and

other Loan Documents . . . .

2. Notwithstanding anything contained herein to the contrary, it is understood and agreed that the liability of Guarantors hereunder is limited to the payment of (i) any and all

interest that accrues on and is added to the principal balance

of the Note pursuant to the terms thereof to an aggregate

maximum for all Guarantors of $182,500.00, (ii) all real

estate taxes due against the Mortgaged Property, and (iii) all

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1 Defendants claim that this 1987 loan was a refinance of a loan from

Old Stone Bank made in 1985. FTD, however, claims that the documents

for the 1987 loan evidence no connection to a 1985 loan.

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insurance premiums for insurance policies required to be

maintained by the Borrower . . . .

J.A. 628, 638, 645, 652. However, one guaranty, which was signed

by Robert Bainum on behalf of the Fairfax Nursing Center Office

Limited Partnership (the twelfth partner in the Partnership), contained

different language. In that guaranty, paragraph 1 stated:

1. Subject to the limitations set forth below, Guarantors

guarantee to Lender the prompt, absolute, and unconditional

payment of that portion of the interest due on the Note as

specified in Paragraph 2 . . . together with all real estate

taxes due against the mortgaged property and all insurance

premiums for insurance policies required to be maintained

by the Borrower . . . .

J.A. 659.

In early 1994 Old Stone Bank came under receivership of the Resolution Trust Corporation (RTC). The loan matured in August 1994,

but just prior to maturity the Partnership defaulted on the loan. FTD

bought the loan from the RTC in November 1995. On December 5,

1995, several of the partners filed an involuntary Chapter 11 bankruptcy petition against the Partnership. Two days later FTD filed in

Virginia state court the breach of contract claims at issue in this case,

alleging that the defendants had failed to make the payments required

under the loan.

In January 1996 defendants removed FTD's action to the United

States District Court for the Eastern District of Virginia. The district

court referred the case to the bankruptcy court, which was concurrently conducting the Partnership's chapter 11 proceeding. As part of

that proceeding, FTD moved for relief from the automatic stay on the

Partnership's assets in order to foreclose on the deed of trust. The

bankruptcy court granted the relief. The defendants then moved for

partial summary judgment on FTD's breach of contract claims. The

bankruptcy court entered an order granting the motion, holding that

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the defendants were liable only for $182,500 in interest on the note.

The district court affirmed the order, and FTD now appeals.2

II.

FTD argues that the bankruptcy court erred in granting summary

judgment on its breach of contract claims against the defendants. FTD

contends that the guaranties signed by the defendants clearly extend

to cover the principal amount of the loan, along with interest, taxes,

and insurance.3 The defendants claim that the bankruptcy court correctly determined that the guaranties extend only to interest, taxes,

and insurance. We review the grant of summary judgment de novo.

See United States v. Jefferson-Pilot Life Ins. Co., 49 F.3d 1020, 1021

(4th cir. 1995).

Looking at the text of all of the guaranties (except the guaranty

signed by Robert Bainum), there appears to be textual support for

both sides' positions. Paragraph 1 guarantees "the prompt, absolute,

and unconditional payment of the principal sum disbursed under and

evidenced by the Note." J.A. 628. This language appears to be a

straightforward guarantee of the entire principal. Paragraph 2, however, states that the liability of the guarantors"is limited to the payment of (i) any and all interest . . . to an aggregate maximum for all

Guarantors of $182,500.00, (ii) all real estate taxes due against the

Mortgaged Property, and (iii) all insurance premiums for insurance

policies required to be maintained by the Borrower." Id. This language appears to limit the liability to interest, taxes, and insurance

premiums and does not include any liability for the principal. The

contrast between these two paragraphs is highlighted by the difference in the guaranty signed by Bainum. Paragraph 1 of the Bainum

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2 FTD has filed two motions requesting that we take judicial notice of

other orders of the bankruptcy court. Because taking notice of these

orders would not effect our disposition of this appeal, we deny the

motions.

3 FTD also makes a res judicata argument, claiming that the bankruptcy

court first decided this issue in favor of FTD during the lift stay hearing.

As the defendants point out, however, FTD failed to raise this argument

before the bankruptcy court or the district court. The argument was therefore waived. See Tabion v. Mufti, 73 F.3d 535, 539 (4th Cir. 1996).

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guaranty only guarantees "the prompt, absolute, and unconditional

payment of that portion of the interest due on the Note as specified

in Paragraph 2 . . . together with all real estate taxes due against the

mortgaged property and all insurance premiums for insurance policies

required to be maintained by the Borrower." J.A. 659. The Bainum

guaranty does not discuss liability for the principal.

We find the contradiction between paragraphs 1 and 2 sufficient to

create an ambiguity about the meaning of the guaranty. Although the

district court recognized that "[t]here does appear to be a problem"

with the contradictory language, it nevertheless found that the guaranties were not ambiguous because paragraph 2 was"the ultimate

trump" that took away the guarantee in paragraph 1. J.A. 76, 78. We

do not read paragraph 2 so powerfully. It is possible that the limitation language in paragraph 2 was intended to wipe out the guaranty

of principal in paragraph 1. Needless to say, however, such drafting

would be unusual. See Ames v. American Nat'l Bank, 176 S.E. 204,

217 (Va. 1934) ("The presumption always is that the parties have not

used words aimlessly and that no provision is merely a superfluity

. . . ."). Moreover, this interpretation (that paragraph 2 cancels out the

guaranty of principal) is by no means compelled. Paragraph 2 might

be read as limiting only those payments which it specifically discusses; for example, it would limit interest to $182,500. Since paragraph 2 does not discuss payment of principal, it could be interpreted

as having no effect on the guarantee of principal made in paragraph

1.

The defendants argue that the contradiction can be resolved by

looking to other loan documents involved in the transaction. According to defendants, the loan contract must be read to include not only

the note, the deed of trust, and the guaranties, but also amendments

made on August 20, 1987, to Old Stone Bank's commitment letter.4

Assuming that the August 20 amendments are part of the underlying

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4 The note specifically references these amendments as part of the "loan

documents." See J.A. 549 ("The Note, the Deed of Trust, the Assignment

of Leases, the commitment letter dated June 30, 1987, as amended by letter agreement dated August 20, 1987, issued in connection with the Loan

and all such other documents and agreements are herein referred to collectively as the `Loan Documents.'").

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agreement, we nevertheless do not find that they resolve the meaning

of the guaranties. The defendants point to two amendments as dispositive to the meaning of the guaranty. The first amendment states that

condition 2 of the original commitment offer shall be amended to

read: "All partners shall unconditionally guarantee, by a written guaranty agreement . . ., payment on a pro rata ownership share basis . . .,

all interest (to an aggregate maximum for all partners of . . .

$182,500), taxes and insurance." J.A. 805. This amendment, however,

is only a restatement of paragraph 2 of the actual guaranty. If anything, it is less compelling than paragraph 2 itself because it lacks

paragraph 2's language that liability is "limited" to interest, taxes, and

insurance premiums. The defendants also point to an amendment to

condition 8 which reads: "It is further understood that any new partner

is to become personally liable for the loan under the terms and conditions of Condition No.2-Guarantor." J.A. 806. The defendants claim

that this language shows that the guaranty in Condition 2 was the only

one imposed on the partners. While the amendment does offer some

evidence in that regard, it is not dispositive. As with paragraph 2, the

amendment could be read only to specify the amount of interest,

taxes, and premiums for which new partners would be liable. Alternatively, it could mean that new partners did not have to assume liability

for the principal.

The district court also seems to have been influenced by its view

of the parol evidence offered by both parties. The court told FTD that

it was "damned if you do and damned if you don't," because if FTD

convinced the court that the guaranty was ambiguous, then the defendants' parol evidence would be allowed in to resolve the matter. J.A.

80. The court suggested that the affidavit of Ronald K. Wills, who

allegedly helped negotiate the loan in 1987, would be "devastating"

to FTD's position. Id. However, in its summary judgment opinion the

bankruptcy court explicitly excluded the Wills affidavit from the

record. The district court recognized this and acknowledged that the

affidavit was "really not before [the bankruptcy court] and it's not

before me." J.A. 80. Even if we were to consider the Wills affidavit,

however, we do not find that it entitles the defendants to summary

judgment. The affidavit alleges that Old Stone Bank generally did not

require personal guaranties on commercial loans and that the parties

did not intend for the defendants to guarantee the principal. Such testimony, even if it could be considered to have some probative value,

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is not sufficient to resolve the glaring contradiction in the text of the

guaranty itself. Affidavits from three of the defendants claiming that

they did not intend to guarantee the principal likewise cannot resolve

the contradiction on summary judgment.5 

"Only an unambiguous writing justifie[s] summary judgment, and

no writing is unambiguous if susceptible of two reasonable interpretations. . . . If there is more than one permissible inference as to intent

to be drawn from the language employed, the question of the parties'

actual intention is a triable issue of fact." Bear Brand Hosiery Co. v.

Tights, Inc., 605 F.2d 723, 726 (4th Cir. 1979) (quotations and citations omitted), quoted in Atalla v. Abdul-Baki , 976 F.2d 189, 192 (4th

Cir. 1992); see also Combs v. Dickenson-Wise Med. Group, 355

S.E.2d 553, 557 (Va. 1987) ("[W]henever it is necessary to refer to

testimony of witnesses in order to ascertain the contract, or to ascertain facts in the light of which the contract is to be construed, then the

court is bound to refer such controverted matters of testimony to the

decision of the jury." (quoting Camp v. Wilson, 33 S.E. 591, 592 (Va.

1899))). Given the two permissible yet contradictory interpretations

that could be given to the guaranties, this issue should not have been

disposed of on summary judgment. In Atalla the agreement between

the parties also had two contradictory provisions: one stated that all

claims against the defendant were waived, while the other stated that

the plaintiff had a right of contribution. We held that "[b]ecause the

parties assert conflicting intentions on the basis of the same language,

which supports both interpretations, it is our opinion that the contract

is ambiguous and that the question of intent raises a genuine issue of

material fact, rendering summary judgment inappropriate." Atalla,

976 F.2d at 195. Faced with a case that is similar in all relevant

respects to Atalla, we too conclude that summary judgment is inappropriate.

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5 The defendants' parol evidence is also counterbalanced by the defendants' tax returns, which were offered by FTD. The returns characterize

the loan as a recourse loan (i.e., a loan for which the defendants would

be personally liable) for tax purposes. See J.A. 690-755.

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III.

The district court erred in affirming the bankruptcy court's order

granting partial summary judgment against FTD. We therefore

reverse the district court's order and remand for trial on FTD's claims.6

REVERSED AND REMANDED

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6 FTD also contends that the bankruptcy court did not have jurisdiction

to enter a final order dismissing its claims. Bankruptcy courts have jurisdiction to enter final orders in "all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11." 28

U.S.C. § 157(b)(1). FTD argues that their underlying claims did not arise

under title 11 and are not core proceedings, and therefore the bankruptcy

court had no jurisdiction to enter a final order. However, since we now

reverse that order and remand the case to district court for trial, the issue

of the bankruptcy court's jurisdiction to enter a final order is moot. If we

were to find that the bankruptcy court did not have jurisdiction, FTD

would simply be entitled to a remand to the district court with a direction

that it review the summary judgment order de novo.

Of course, we would have to dismiss the case if the district court did

not have jurisdiction over FTD's claims. The district court has jurisdiction over the claims as long as they constitute proceedings "arising in or

related to cases under title 11." 28 U.S.C. § 1334(b). FTD does not contend that its claims do not "relate to" a proceeding under title 11. Given

the connection between the defendants, the Partnership (the debtor in the

underlying bankruptcy case), and the relief sought by FTD, we find that

FTD's claims are sufficiently related to the bankruptcy proceeding to

provide the district court with jurisdiction.

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