J-A19019-14 

* Former Justice specially assigned to the Superior Court. 

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 

CITIZENS BANK OF PENNSYLVANIA, IN THE SUPERIOR COURT OF

PENNSYLVANIA 

 Appellant 

v. 

FINE CAPITAL ASSOCIATES, L.P., AND 

FFC PARTNERSHIP, L.P., 

 Appellees No. 1367 WDA 2013 

Appeal from the Order Entered August 5, 2013 

In the Court of Common Pleas of Allegheny County 

Civil Division at No(s): GD-10-018621 

 

BEFORE: BENDER, P.J.E., OLSON and FITZGERALD,* JJ. 

MEMORANDUM BY OLSON, J.: FILED NOVEMBER 25, 2014 

Appellant, Citizens Bank of Pennsylvania, appeals from the order 

entered on August 5, 2013, which granted the motion for summary 

judgment filed on behalf of Appellees, Fine Capital Associates, L.P. and FFC 

Partnership, L.P. (hereinafter “the Guarantors”), implicitly denied Appellant’s 

cross-motion for summary judgment, and dismissed Appellant’s complaint 

against the Guarantors with prejudice. After careful review, we are 

constrained to vacate the learned trial court’s order in part and remand. 

Introduction 

By way of overview, this case arose from a lending relationship 

between Appellant, the Guarantors, and the following entities: BPP Illinois, 

LLC, BPP Iowa, LLC, BPP Michigan, LLC, BPP Minnesota, LLC, BPP Texas, LLC, 

and BPP Wisconsin, LLC (hereinafter “the Debtors”). Briefly stated, 
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Appellant loaned the Debtors a substantial sum of money, so that the 

Debtors could develop certain hotel properties, and the Guarantors promised 

to be the Debtors’ surety on the loan obligations. The promises and 

obligations of the parties were memorialized in a credit facility (between 

Appellant and the Debtors) and in a Guaranty and Suretyship Agreement 

(between Appellant and the Guarantors). 

Appellant claimed that the Debtors and the Guarantors defaulted 

under the respective agreements; and, as a result of the default, Appellant 

accelerated the loan. When neither the Debtors nor the Guarantors paid 

Appellant’s demand, Appellant filed suit against the Debtors and Guarantors 

in the Court of Common Pleas of Allegheny County, claiming breach of 

contract. 

While the lawsuit was pending in the trial court, the Debtors filed for 

bankruptcy protection under Chapter 11 of the Bankruptcy Code. The trial 

court then stayed the entire underlying lawsuit pending the bankruptcy 

proceedings. 

In the Bankruptcy Court, the Debtors’ Confirmed Plan declared that, 

“in full and final satisfaction” of Appellant’s claim, the Debtors were required 

to sell all of their hotel properties and provide Appellant with the proceeds 

from the sales. The Confirmed Plan also required that the Debtors execute 

and provide Appellant with amended loan documents, which restructured the 

loan. The Confirmed Plan then incorporated, into the Plan, the obligations 

contained in the restructured loan documents. 
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Following the discharge of the Debtors, Appellant’s litigation against 

the Guarantors continued in the trial court. There, the Guarantors promptly 

filed a motion for summary judgment, claiming that the restructured loan 

documents – that Appellant and the Debtors had executed in the Bankruptcy 

Court and in accordance with the Confirmed Plan – had “cured” the 

Guarantors’ earlier default under the Guaranty and Suretyship Agreement. 

The Guarantors also claimed that the restructured loan documents had 

materially modified their obligations as a surety, and that the Guarantors 

were thus relieved of any liability under the Guaranty and Suretyship 

Agreement. 

The trial court granted the Guarantors’ summary judgment motion and 

dismissed Appellant’s complaint against the Guarantors. Appellant filed a 

notice of appeal. 

Facts 

On October 4, 2010, Appellant commenced the instant suit by filing a 

complaint against the Guarantors and the Debtors.1, 2 As Appellant averred, 

on February 8, 2008, Appellant agreed to loan the Debtors $66,000,000.00 

____________________________________________ 

1

 The complaint declared that each of the Debtors is a single-purpose, 

limited liability company, whose sole material asset is the ownership of one 

or more hotel. Appellant’s Complaint, 10/4/10, at ¶¶ 2-7. 

2

 Appellant claimed that the Guarantors and the Debtors “are all owned and 

controlled, through a number of corporate intermediaries, [by an individual 

named] Milton Fine.” Appellant’s Complaint, 10/4/10, at 3-4. 
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(hereinafter “the Loan”), so that the Debtors could renovate, reflag, 

purchase real property for, and operate the 22 hotels that the Debtors 

owned.3 Appellant’s Complaint, 10/4/10, at ¶ 13. The Loan was secured by 

mortgages on the 22 hotels and by a February 8, 2008 Security Agreement 

between Appellant and the Debtors. Id. at ¶ 19. 

The terms of the Loan were governed by a Credit Agreement, which 

Appellant and the Debtors executed on February 8, 2008. The Credit 

Agreement defined an “Event of Default” as including the failure of the 

Debtors to pay the principal or interest on the Loan within 15 days of the 

amounts becoming due. Credit Agreement, 2/8/08, at ¶ 8.1.1. Under the 

Credit Agreement, if such an Event of Default occurred: 

[Appellant] shall be under no further obligation to make 

Loans and [Appellant] may by written notice to [the

Debtors], declare the unpaid principal amount of the Notes 

then outstanding and all interest accrued thereon, any fees 

and all other Indebtedness of [the Debtors] to [Appellant] 

hereunder and thereunder to be forthwith due and payable, 

and the same thereon become and be immediately due and 

payable to [Appellant] without presentment, demand,

protest or any other notice of any kind, all of which are 

hereby expressly waived. 

Id. at ¶ 8.2.1. 

____________________________________________ 

3

 Appellant averred that “[a]ll of the [hotels] are owned by a [Debtor] in fee 

simple, with the exception of the Super 8 [Hotel] located in Wauwatosa, 

Wisconsin, which BPP Wisconsin holds as a leasehold.” Appellant’s 

Complaint, 10/4/10, at ¶ 14. Yet, for ease and clarity of explanation, we will 

simply refer to the Debtors as the “owners” of the hotels. 
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Moreover, pursuant to the terms of the Credit Agreement and in 

consideration of the credit that was to be granted the Debtors, Appellant and 

the Guarantors entered into a separate Guaranty and Suretyship Agreement. 

See Credit Agreement, 2/8/08, at ¶ 6.1.3 (“conditions of lending”); 

Guaranty and Suretyship Agreement, 2/8/08, at 1. Under the Guaranty and 

Suretyship Agreement, the Guarantors agreed to become the “absolute and 

unconditional guarantors and sureties as though they were primary obligors 

to [Appellant]” of, among other things: 1) “the prompt payment and 

performance when due” of a stated portion of the Debtors’ principal payment 

obligations; and 2) the payment of all interest under the Loan and the 

payment of all expenses Appellant might incur in enforcing its rights or 

collecting under either the Guaranty and Suretyship Agreement or the Loan 

Documents.4 Guaranty and Suretyship Agreement, 2/8/08, at ¶ 1. 

____________________________________________ 

4

 The Credit Agreement defined the term “Loan Documents” in the following 

manner: 

Loan Documents shall mean [the Credit Agreement], the 

Guaranty Agreement, the Environmental Indemnity, the 

Lease Assignments, the Mortgages, the Notes, the Security 

Agreement, the Collateral Assignments, agreements related 

to Bank-Provided Hedges and any other instruments, 

certificates or documents delivered or contemplated to be 

delivered hereunder or thereunder or in connection herewith 

or therewith, as the same may be supplemented or 

amended from time to time in accordance herewith or

therewith, and Loan Document shall mean any of the Loan 

Documents. 

Credit Agreement, 2/8/08, at ¶ 1.1. 
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The Guaranty and Suretyship Agreement between Appellant and the 

Guarantors further provided: that Appellant may, at its sole option, 

exchange or release any collateral security held by Appellant for any of the 

“Debtor Liabilities;”5 that Appellant may, at its sole option, “renew, extend, 

modify, supplement, amend, release, alter or compromise the terms of any 

or all of the Debtor Liabilities;” that the Guaranty and Suretyship Agreement 

was a continuing agreement and remained in force until “all Debtor Liabilities 

and all other amounts payable under the Loan Documents have been paid 

and performed in full;” that the Guarantors’ liability under the Guaranty and 

Suretyship Agreement “is absolute and unconditional for the aggregate of 

the Debtor Liabilities;” that the Guarantors waived all notice with respect to 

the present existence or future incurrence of any Debtor Liabilities, including 

“the amount, terms[,] and conditions thereof;” and, that the Guarantors 

waived “any defense arising by reason of any disability or other defense 

whatsoever to the liability of any Debtor.” See id. at ¶¶ 2, 4, 11, 12, 13, 

____________________________________________ 

5

 Under the Guaranty and Suretyship Agreement, the term “Debtor 

Liabilities” included the “Principal Payment Liabilities” and the “Cost Payment 

Liabilities.” In short, the “Principal Payment Liabilities” are the Debtors’ 

existing and future liabilities and obligations with respect to the payment of 

the Loan principal (including “any extensions, modifications, . . . and 

substitutions therefor . . . of any nature whatsoever”); the “Cost Payment 

Liabilities” are the Debtors’ existing and future liabilities and obligations with 

respect to the payment of the Loan interest and the cost of enforcing the 

agreements or collecting on the obligations (including “any extensions, 

modifications, . . . and substitutions therefor . . . of any nature 

whatsoever”). Guaranty and Suretyship Agreement, 2/8/08, at ¶ 1. 
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15, and 18. With respect to the Debtors’ possible bankruptcy, the Guaranty 

and Suretyship Agreement specifically declared: 

16. BANKRUPTCY OF THE DEBTOR. Neither the 

Guarantors’ obligations to make payment in accordance 

with the terms of [the Guaranty and Suretyship] Agreement 

nor any remedy for the enforcement hereof shall be 

impaired, modified, changed, released or limited in any 

manner whatsoever by any Debtor’s bankruptcy or by any 

impairment, modification, change, release or limitation of (i) 

the liability of any Debtor, any Person assuming the 

obligations of any Debtor under any of the Loan Documents 

or such Debtor’s estate in bankruptcy. . . . 

Id. at ¶ 16. 

Further, the Guaranty and Suretyship Agreement declared: 

20. ACCELERATION OF THE GUARANTORS’ LIABILITIES. 

Upon the occurrence of an Event of Default,[6] all of the 

Debtor Liabilities shall, at [Appellant’s] sole option, be 

deemed to be forthwith due and payable for the purposes of 

this Agreement and for determining the liability of the 

Guarantors hereunder, whether or not [Appellant] has any 

such rights against any other Obligor, and whether or not 

[Appellant] elects to exercise any rights or remedies against 

any other Person or property including, without limitation, 

any other Obligor. 

____________________________________________ 

6

 The Guaranty and Suretyship Agreement defined an “Event of Default” as 

including the following occurrences: 1) “[t]he Guarantors shall fail to pay 

any principal of any Loan (including scheduled installments, mandatory 

prepayments or the payment due at maturity) or shall fail to pay any 

interest on any Loan or any other amount owing hereunder or under the 

other Loan Documents within ten (10) days after such principal, interest or 

other amount becomes due in accordance with the terms hereof or thereof 

(whether at stated maturity, by acceleration or otherwise)” and 2) “[a]n 

‘Event of Default’ shall occur under any other Loan Document.” Guaranty 

and Suretyship Agreement, 2/8/08, at ¶¶ 19.1 and 19.4. 
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Id. at ¶ 20. 

As Appellant averred, the Debtors borrowed a total principal amount of 

$65,815,728.44 from Appellant, in accordance with the above agreements. 

Appellant’s Complaint, 10/4/10, at ¶ 42. 

Appellant further averred that, on March 22, 2010, it provided the 

Debtors and the Guarantors with written notice that Events of Default under 

the Credit Agreement had occurred. These Events of Default included the 

failure of the Debtors and the Guarantors to make scheduled interest 

payments on the Loan. Id. at ¶ 26; Letter, 3/22/10, at 1-3. As a result of 

the default, Appellant informed the Debtors and the Guarantors that it was 

declaring the entire principal amount of the Loan and all interest, unpaid 

fees, and indebtedness to be “forthwith due and payable.” Letter, 3/22/10, 

at 2; Appellant’s Complaint, 10/4/10, at ¶ 26. 

When neither the Debtors nor the Guarantors paid what was 

demanded, Appellant filed its two-count complaint, wherein Appellant 

claimed breach of contract against the Debtors and breach of guaranty 

against the Guarantors. Appellant’s Complaint, 10/4/10, at ¶¶ 41-48. 

The Debtors and the Guarantors filed responsive pleadings to 

Appellant’s complaint and both sets of defendants denied liability. Within 

the Guarantors’ answer and new matter, the Guarantors essentially claimed 

that they were not liable under the Guaranty and Suretyship Agreement 

because Appellant “orally modified the obligation underlying the Guaranty by 

consenting to the non-payment of interest” and, in the alternative, that their 
J-A19019-14 

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obligations under the guaranty were discharged because Appellant impaired 

the value of the collateral. See, e.g., The Guarantors’ Answer and New 

Matter, 11/1/10, at ¶ 20. 

On December 21, 2010, the Debtors each filed voluntary petitions for 

relief under Chapter 11 of the Bankruptcy Code. The trial court thus stayed 

Appellant’s action against the Debtors, in accordance with Section 362(a) of 

the Bankruptcy Code. See 11 U.S.C. § 362 (“Automatic stay”). However, 

given that “it is universally acknowledged that an automatic stay of 

proceedings accorded by § 362 may not [normally] be invoked by entities 

such as sureties, guarantors, co-obligors, or others with a similar legal or 

factual nexus to the debtor,” Appellant filed a motion in the trial court, 

requesting that the trial court sever its claims against the non-debtor 

Guarantors and allow the litigation on those claims to proceed. McCartney 

v. Integra Nat’l Bank N., 106 F.3d 506, 509-510 (3rd Cir. 1997) (internal 

quotations, citations, and corrections omitted); Appellant’s Motion to Sever, 

1/24/11, at 1-8 (declaring that, although it might be legally unnecessary, “it 

has become conventional practice in many jurisdictions, including 

Pennsylvania, to sever claims against non-debtor defendants to promote 

efficiency and procedural clarity going forward”). 

The Guarantors filed a response to Appellant’s motion and argued that 

the trial court must deny the severance request because the Debtors “are [] 
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indispensable parties to the instant litigation” and because Appellant’s 

contract action could not proceed without the Debtors’ participation.7 The 

Guarantors’ Response, 2/14/11, at 3. Further, the Guarantors filed a motion 

to stay the state court proceedings, again arguing that the Debtors were 

indispensable parties to the litigation.8 The Guarantors’ Motion to Stay, 

2/14/11, at 5. 

On July 13, 2011, over Appellant’s objection, the trial court entered an 

order granting the Guarantors’ motion to stay; the trial court ordered that 

the action was stayed in its entirety, pending a final resolution of the 

bankruptcy proceeding. Trial Court Order, 7/13/11, at 1. 

____________________________________________ 

7 But see Read v. Pa. Co. for Ins. on Lives and Granting Annuities, 12 

A.2d 925, 927 (Pa. 1940) (“it is the law that a creditor may enforce his claim 

against the surety without first having proceeded against the principal”). 

8 But see McCartney, 106 F.3d at 509-511 (courts may extend an 

automatic stay to non-debtor third parties only in “unusual circumstances,” 

such as where “there is such identity between the debtor and the third-party 

defendant that the debtor may be said to be the real party defendant and 

that a judgment against the third-party defendant will in effect be a 

judgment or finding against the debtor” and where the stay protection “is 

essential to the debtor[’s] efforts [at] reorganization”); see also Credit 

Alliance Corp. v. Williams, 851 F.2d 119, 122 (4th Cir. 1988) (“[t]he very 

purpose of a guaranty is to assure the creditor that in the event the debtor 

defaults, the creditor will have someone to look to for reimbursement. The 

purpose of the guaranty would be frustrated by interpreting [11 U.S.C. 

§ 362] so as to stay [the creditor’s] action against the non-bankrupt 

guarantor when the defaulting debtor petitioned for bankruptcy”) (internal 

quotations, citations, and corrections omitted). 
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On September 27, 2011, the Debtors executed their Second Amended 

Modified Joint Consolidated Plan of Reorganization (hereinafter “the Plan”) in 

the United States Bankruptcy Court for the Eastern District of Texas. The 

Plan declared that Appellant was allowed a secured claim in the amount of 

$67,400,835.06.9 The Plan, 9/27/11, at ¶ 4.3.1. According to the Plan, 

“[i]n full and final satisfaction, discharge, and release” of Appellant’s 

$67,400,835.06 secured claim, the Debtors would sell all of their hotels and 

then pay Appellant the proceeds from the sales. Id. at ¶ 4.3.3(i). Further, 

and as a condition of the discharge, the Plan required that the Debtors 

execute and then deliver to Appellant a number of documents, including: an 

amended and restated credit agreement (hereinafter “Amended Credit 

Agreement”), an amended and restated non-revolving credit note 

(hereinafter “Amended Note”), and an omnibus amendment and ratification 

agreement. Id. at ¶ 4.3.3(vii) and “Schedule A.” As the Plan declared, the 

execution and delivery of the above documents was “a condition precedent 

to the occurrence of the Effective Date” and the Plan incorporated the 

obligations that were stated in the documents. Id. at ¶ 4.3.3(vii) and 

“Schedule A.” Specifically, the Plan declared: 

The Reorganized Debtors shall execute, and shall deliver to 

[Appellant] no later than five [] Business Days following the 

____________________________________________ 

9

 The Plan refers to Appellant’s $67,400,835.06 secured claim as the “Lender 

Secured Claim.” The Plan, 9/27/11, at 14. 
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entry of the Confirmation Order, the documents listed at 

Schedule A[10] attached hereto duly executed as 

appropriate. The execution and delivery of the same is a 

condition precedent to the occurrence of the Effective Date. 

Upon such delivery, the Reorganized Debtors shall comply 

with all obligations stated therein, including any reporting 

requirements, even if any such obligation is not specifically 

referenced in this Plan, in which case such obligation shall 

be deemed to be an obligation under this Plan. . . . 

Id. at ¶ 4.3.3(vii) and “Schedule A.” 

The Amended Credit Agreement, Amended Note, and omnibus 

amendment and ratification agreement were amended loan documents 

concerning Appellant’s Loan to the Debtors; the documents, in essence, 

restructured the Loan in order to effectuate the terms of the Plan. As the 

trial court succinctly explained, the documents provided for an amended 

“note in an amount greater than the amount of the original note, . . . 

included numerous material modifications to the financial terms and 

[covenants] governing the creditor-debtor relationship[,] . . . forced [the 

Debtors] to liquidate their assets in a relatively short time frame, and 

[declared that] the Debtors agreed to waive all defenses such as the right to 

seek bankruptcy relief.” Trial Court Opinion, 11/15/13, at 6. 

With respect to Appellant’s claims against the Guarantors, the Plan 

explicitly declared: 

____________________________________________ 

10 “Schedule A” is attached to the Plan and lists the Amended Credit 

Agreement, the Amended Note, and the omnibus amendment and 

ratification agreement. The Plan, 9/27/11, at “Schedule A.” 
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9.8 No Discharge of Guarantors. For the avoidance of 

doubt, nothing in this Plan and nothing in the Confirmation 

Order serves or will serve to discharge any claim, cause of 

action, or right that any creditor or person has against any 

third person or guarantor for or on account of a claim 

against one or more of the Debtors, including, without 

limitation, any claim that [Appellant] may have against the 

Guarantors. . . . 

The Plan, 9/27/11, at ¶ 9.8. 

On October 4, 2011, the Bankruptcy Court entered an order of 

confirmation (hereinafter “Confirmation Order”), which confirmed the Plan 

and declared that, except as otherwise provided in the Plan, the Debtors 

were discharged pursuant to section 1141(d)(1)(A) of the Bankruptcy Code. 

Confirmation Order, 10/4/11, at 6-7. The Confirmation Order declared that, 

henceforth, “all [p]roperty of the Debtors and their Estates vest[s] in the 

Reorganized Debtors.” Id. at 7. Moreover, the Confirmation Order declared 

that the Debtors’ discharge did not affect the liability of the Guarantors. The 

order declared: 

the Plan and [the Confirmation] Order are wholly without 

prejudice to all claims, causes of action, defenses, and 

rights of [Appellant] as against the Guarantors . . . 

including, without limitation . . . all matters asserted or 

assertable in Case Number GD 10-18621 pending in the 

Civil Division, Court of Common Pleas of Allegheny County, 

Pennsylvania. 

Id. at 9. 

Finally, the Confirmation Order declared that the restructuring of the 

Loan was simply a “modification and amendment” of the Lender Secured 
J-A19019-14 

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Claim and was not a “new extension of credit.” With respect to this issue, 

the Confirmation Order declared: 

that the credit facility described in the Credit Agreement is a 

modification and amendment of the Lender Secured Claim 

pursuant to and as defined in the Plan and is not in any way 

a new extension of credit, an accord and satisfaction, or 

other arrangement that would impair in any way 

[Appellant’s] right to assert claims against any non-Debtor 

party as to the Lender Secured Claim, nor would it or this 

Order impair in any way any non-Debtor’s right to assert 

any defense thereto, including, without limitation, any 

defense relating to or arising from the modification and 

amendment of the Lender Secured Claim[.] 

Id. at 8. 

On February 13, 2012, the trial court issued an order dissolving the 

stay with respect to Appellant’s case against the Guarantors; the trial court 

order also declared that the parties were permitted to file dispositive 

motions on the issue of the Guarantors’ liability.11 Trial Court Order, 

2/10/12, at 1. 

In response to the trial court’s order, Appellant and the Guarantors 

filed cross-motions for summary judgment. Within Appellant’s summary 

judgment motion, Appellant claimed that it was entitled to summary 

judgment, in its favor, with respect to the Guarantors’ liability. According to 

Appellant, the principals of the Guarantors had admitted that, as of March 

____________________________________________ 

11 On October 20, 2011, Appellant filed a praecipe with the Allegheny County 

Department of Court Records (hereinafter “ACDCR”), requesting that the 

ACDCR discontinue the action against the Debtors with prejudice. 

Appellant’s Praecipe to Discontinue, 10/20/11, at 1. 
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23, 2010, the Guarantors “had not made their most recently required 

interest payments and swap payments.” Appellant’s Brief in Support, 

3/30/12, at 11. Since this constituted a default under the Guaranty and 

Suretyship Agreement and since this default caused Appellant to accelerate 

the Loan and demand that the Guarantors pay their obligation in full, 

Appellant claimed that it was entitled to a judgment as a matter of law with 

respect to the Guarantors’ liability. Id.

Further, Appellant claimed that the Guarantors had no defense to the 

breach of guaranty claim. Appellant noted that, within the Guarantors’ 

answer and new matter, the Guarantors had claimed that Appellant “orally 

modified the obligation underlying the Guaranty by consenting to the nonpayment of interest” and that Appellant impaired the value of the collateral. 

See, e.g., The Guarantors’ Answer and New Matter, 11/1/10, at ¶ 20. 

Appellant, however, claimed that these two defenses failed as a matter of 

law. With respect to the alleged forbearance agreement, Appellant claimed 

that this defense failed because the alleged oral forbearance: is barred by 

the statute of frauds; is unenforceable because it was not supported by any 

consideration; is unenforceable because the Credit Agreement contains a “no 

oral modification” clause; is not a valid agreement; does not discharge the 

Guarantors because the alleged oral forbearance occurred after the 

Guarantors’ default; does not discharge the Guarantors because the alleged 

modification was not a material change that substantially increased the 

Guarantors’ risk; and, was consented to by the Guarantors. Appellant’s Brief 
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in Support of Motion for Summary Judgment, 3/30/12, at 12-23. Further, 

with respect to the “impairment of collateral” defense, Appellant claimed 

that this defense failed because the Guarantors signed an unconditional 

guaranty and thus “waived the right to participate in [Appellant’s] 

collateral.” Id. at 23-25. 

Therefore, Appellant claimed that since the Guarantors admitted to 

being in default and since the Guarantors’ defenses failed as a matter of law, 

Appellant was entitled to summary judgment in its favor. Id.

The Guarantors responded to Appellant’s motion for summary 

judgment and primarily argued that the Debtors’ bankruptcy – and the 

resulting Plan, amended loan agreements, and Confirmation Order – had 

“cured” the Guarantors’ original default. The Guarantors argued: 

the Debtors filed bankruptcy petitions[,] a Confirmation 

Order confirming a “consensual” Plan was entered[,] and 

the Debtors and [Appellant] entered into [an Amended 

Credit] Agreement and executed the New Loan Documents 

to memorialize their agreement. As a matter of law, the 

Original Loan has been replaced and no longer exists. The 

Guaranty provides that the [Guarantors] originally were 

liable “as though they were primary obligors to [Appellant].” 

Since [the Guarantors] . . . stand in the shoes of the 

Debtors, when the Debtors’ primary liability went away, so 

did the alleged liability of the [Guarantors]. 

The Guarantors’ Response, 5/7/12, at 7. 

Moreover, the Guarantors argued that: they never admitted that they 

were in default of the Guaranty and Suretyship Agreement; the Bankruptcy 

Court already determined that there was a valid forbearance agreement and 
J-A19019-14 

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Appellant is collaterally estopped from claiming otherwise; the forbearance 

agreement is otherwise enforceable; and, the Guaranty and Suretyship 

Agreement does not permit the impairment of collateral. Id. at 8-11 and 

18-23. 

The Guarantors also filed a cross-motion for summary judgment and 

claimed that they were entitled to a judgment as a matter of law because 

“the Plan, the [Amended] Credit Agreement[,] and the New Note modify and 

restate the Original Credit Agreement and Original Note in their entirety, 

such that nothing of the Original Loan Documents remain[].” The 

Guarantors’ Motion for Summary Judgment, 3/30/12, at 7. According to the 

Guarantors, since the Debtors were no longer liable under the Original Loan 

Documents, the Guarantors also could not be liable. Id. Further, the 

Guarantors claimed that they could not be liable under the Amended Credit 

Agreement, as the new contractual terms “materially increased [the 

Guarantors’] risk” – thus discharging their obligations as surety. Id. at 8; 

see McIntyre Square Assoc.’s v. Evans, 827 A.2d 446, 452 (Pa. Super. 

2003) (“Where, without the surety's consent, there has been a material 

modification in the creditor-debtor relationship, a . . . compensated surety is 

discharged [] if, without the surety’s consent, there has been a material 

modification in the creditor-debtor relationship and said modification has 

substantially increased the surety’s risk”). 

On August 5, 2013, following extensive briefing and oral argument, 

the esteemed trial court judge entered an order that granted the Guarantors’ 
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motion for summary judgment, implicitly denied Appellant’s cross-motion for 

summary judgment, and dismissed Appellant’s complaint against the 

Guarantors with prejudice. The trial court reasoned: 

The Bankruptcy agreement essentially restructured and 

reorganized the creditor-debtor relationship, and effectively 

discharged the Debtors as they stood under the Original 

Credit Agreement[. T]he consent agreement in the 

bankruptcy action [thus] renders the Original Credit 

Agreement null and void. As [the Guarantors’ were] not [] 

part[ies] to the [Amended] Credit Agreement, and since the 

Original Credit Agreement no longer exists, any liability to 

the [G]uarantors for default events under the Original Credit 

Agreement [is] extinguished. 

Trial Court Opinion, 11/15/13, at 9. 

Appellant filed a timely notice of appeal and now raises the following 

claims to this Court: 

1. Whether modifications to the loan entered into under a 

confirmed plan of reorganization in federal bankruptcy 

proceeding discharged the [Guarantors’] obligations under 

the guaranty? 

2. Whether the [Guarantors] consented to modifications to 

the loan relationship contained in the plan and amended 

and restated credit agreement pursuant to the clear and 

unambiguous advance consents and waivers of suretyship 

defenses in the guaranty? 

3. Whether the bankruptcy plan and amended and restated 

credit agreement constituted (1) material modifications to 

the debtor-creditor relationship, (2) which substantially 

increased the risk to the [Guarantors], and (3) to which the 

[Guarantors] did not consent (or were not deemed to have 

consented) such that the [Guarantors’] guaranty was

discharged? 
J-A19019-14 

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4. Whether the amended and restated credit agreement is a 

single integrated document that precludes enforcement of 

the [Guarantors’] guaranty? 

5. Whether the [Guarantors’] guaranty was discharged as to 

the existing obligations of the [Debtors] under the plan and 

amended and restated credit agreement where the guaranty 

expressly guarantees all present and future liabilities of [the 

Debtors] to Appellant? 

Appellant’s Brief at 4-5. 

Analysis 

Initially, we conclude that Appellant waived any potential claim that 

the trial court erred when it implicitly denied Appellant’s cross-motion for 

summary judgment. Within Appellant’s brief to this Court, Appellant has 

focused its attention on the specific portion of the trial court’s order that 

granted the Guarantors’ summary judgment motion. Moreover, even though 

Appellant declares that we should direct that summary judgment be entered 

in its favor, Appellant has done so in conclusory fashion and has failed to 

establish that there are no genuine issues of material fact with respect to the 

claims raised in its own summary judgment motion. In particular, Appellant 

has not made any argument that the Guarantors’ actual default has been 

established as a matter of law or that the Guarantors’ stated defenses to the 

alleged default fail as a matter of law. See, e.g., Appellant’s Brief in 

Support of Motion for Summary Judgment, 3/30/12, at 11-25. Therefore, 

Appellant has waived any such claim on appeal. Wirth v. Commonwealth, 

95 A.3d 822, 837 (Pa. 2014) (“[w]here an appellate brief fails to provide any 

discussion of a claim with citation to relevant authority or fails to develop the 
J-A19019-14 

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issue in any other meaningful fashion capable of review, that claim is 

waived. It is not the obligation of an appellate court to formulate appellant’s 

arguments”) (internal quotations, citations, and corrections omitted). 

Nevertheless, we conclude that Appellant’s first claim on appeal 

entitles Appellant to relief. Specifically, we hold that the loan modifications 

entered into by the Debtors pursuant to the confirmed reorganization plan in 

the federal bankruptcy proceedings (and Appellant’s consent thereto) do not 

relieve the Guarantors of their obligations under the Guaranty and 

Suretyship Agreement. We thus vacate the trial court’s order in part and 

remand.12 

In the case at bar, the trial court granted the Guarantors’ motion for 

summary judgment and dismissed Appellant’s complaint. We note: 

Our scope of review of a trial court’s order granting or 

denying summary judgment is plenary, and our standard of 

review is clear: the trial court’s order will be reversed only 

where it is established that the court committed an error of 

law or abused its discretion. 

Summary judgment is appropriate only when the record 

clearly shows that there is no genuine issue of material fact 

and that the moving party is entitled to judgment as a 

matter of law. The reviewing court must view the record in 

the light most favorable to the nonmoving party and resolve 

all doubts as to the existence of a genuine issue of material 

fact against the moving party. Only when the facts are so 

clear that reasonable minds could not differ can a trial court 

properly enter summary judgment. 

____________________________________________ 

12 Given our disposition, we need not address Appellant’s remaining issues. 
J-A19019-14 

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Englert v. Fazio Mech. Serv.’s, Inc., 932 A.2d 122, 124 (Pa. Super. 2007) 

(internal citations omitted). 

In granting the Guarantors’ summary judgment motion, the trial court 

essentially ruled that the Debtors’ bankruptcy – and the resulting Plan, 

amended loan agreements, and Confirmation Order – cured the Guarantors’ 

original, alleged default under the Guaranty and Suretyship Agreement. 

According to the trial court, since Appellant and the Debtors executed 

amended loan documents during the bankruptcy proceeding, the “Original 

Credit Agreement no longer exists [and] any liability to the [G]uarantors for 

default events under the Original Credit Agreement are extinguished.” Trial 

Court Opinion, 11/15/13, at 9. 

We respectfully disagree with the trial court’s conclusion. While we 

acknowledge the hard work and thoughtful consideration invested by the 

trial court in this case, our own review of the issues raised on appeal begins 

with, and focuses upon, the independent obligations of the Guarantors under 

their agreement with Appellant. As we develop in greater detail below, 

although Pennsylvania law is silent on the issue, we conclude that the 

restructuring of the Debtors’ loan in bankruptcy – and the Debtors’ resulting 

discharge – neither cured the Guarantors’ earlier default nor defeated the 

Guarantors’ promises on their own underlying obligations. 

Section 524(e) of the Bankruptcy Code generally provides that the 

“discharge of the debtor does not affect the liability of any other entity on, 

or the property of any other entity for, such debt.” 11 U.S.C. § 524(e). 
J-A19019-14 

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Hence, ordinarily, the “discharge of the principal debtor in bankruptcy will 

not discharge the liabilities of co-debtors[, sureties,] or guarantors.”13 In re 

American Hardwoods, Inc., 885 F.2d 621, 625 (9th Cir. 1989) (internal 

____________________________________________ 

13 We note that the Restatement (Third) of Suretyship and Guaranty defines 

a “guarantor” and a “surety” in the following manner: 

if the parties to a contract identify one party as a 

“guarantor” or the contract as a “guaranty,” the party so 

identified is a secondary obligor and the secondary

obligation is, upon default of the principal obligor on the 

underlying obligation, to satisfy the obligee's claim with 

respect to the underlying obligation 

. . . 

if the parties to a contract to which the principal obligor and 

secondary obligor are both parties identify one party as a 

“surety,” or the contract as a “suretyship” contract, the 

party so identified is a secondary obligor who is subject to a 

secondary obligation pursuant to which the secondary 

obligor is jointly and severally liable with the principal 

obligor to perform the obligation set forth in that contract 

Restatement (Third) of Suretyship and Guaranty § 15(a) (1996). 

Pennsylvania has, however, largely eliminated the distinction between a 

guaranty and a suretyship agreement; it has done so by mandating that, 

unless otherwise specified, every such contract is a contract of suretyship. 

See 8 P.S. § 1 (“Every written agreement hereafter made by one person to 

answer for the default of another shall subject such person to the liabilities 

of suretyship, and shall confer upon him the rights incident thereto, unless 

such agreement shall contain in substance the words: ‘This is not intended 

to be a contract of suretyship,’ or unless each portion of such agreement 

intended to modify the rights and liabilities of suretyship shall contain in 

substance the words: ‘This portion of the agreement is not intended to 

impose the liability of suretyship’”). 
J-A19019-14 

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quotations and citations omitted). Rather, the “discharge in bankruptcy 

does not extinguish the debt itself, but merely releases the debtor from 

personal liability for the debt[; thus,] . . . the debt still exists and can be 

collected from any other entity that might be liable.” Matter of 

Edgeworth, 993 F.2d 51, 53 (5th Cir. 1993). 

Moreover, the vast majority of courts who have confronted the issue 

have also held that, when a debtor’s loan is restructured in bankruptcy, the 

restructuring of the loan neither releases the non-debtor surety nor “cures” 

the surety’s own default.14 For example, in United States v. Stribling 

Flying Service, Inc., the Small Business Administration extended a loan to 

____________________________________________ 

14 Within the Guarantors’ brief to this Court, the Guarantors continuously 

refer to the restructured Loan as a “new” loan. The Guarantors’ 

characterization of the restructured Loan as a “new” loan is, however, 

contrary to the explicit terms of the Bankruptcy Court’s Confirmation Order. 

Indeed, the Confirmation Order declares: 

ORDERED that the credit facility described in the Credit 

Agreement is a modification and amendment of the 

Lender Secured Claim pursuant to and as defined in the 

Plan and is not in any way a new extension of credit, 

an accord and satisfaction, or other arrangement that would 

impair in any way [Appellant’s] right to assert claims 

against any non-Debtor party as to the Lender Secured 

Claim, nor would it or this Order impair in any way any nonDebtor’s right to assert any defense thereto, including, 

without limitation, any defense relating to or arising from 

the modification and amendment of the Lender Secured 

Claim[.] 

Confirmation Order, 10/4/11, at 8 (emphasis added).
J-A19019-14 

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a corporation, with payment for the loan secured by the unconditional 

personal guaranties of Donald and Frances Kimball. After the corporation 

defaulted on the note and the Kimballs defaulted on the guaranty, the 

United States agency accelerated the debt and then filed suit against the 

corporation and the Kimballs for breach of contract. United States v. 

Stribling Flying Serv., Inc., 734 F.2d 221, 222-223 (5th Cir. 1984). The 

corporation filed a bankruptcy petition under Chapter 11 of the Bankruptcy 

Code and the bankruptcy court confirmed the corporation’s plan of 

reorganization, wherein the corporation’s loan was restructured and the 

corporate debt owed on the note was reduced. Id. 

Following confirmation of the corporation’s plan, the Kimballs claimed 

in court that the confirmed bankruptcy plan had affected their own 

obligations as guarantors of the debt. Of relevance to the case at bar, the 

Kimballs claimed that “the confirmation of the plan cured the default on the 

previously accelerated corporate debt, so that their guaranties [now only] 

guarant[eed] the restructured and reduced debt” and that “the confirmation 

order act[ed] as collateral estoppel or res judicata as to any claim that might 

be brought . . . against the individual guarantors of the corporate debt.” Id. 

The Fifth Circuit rejected both claims and held that the “the obligation[s] of 

. . . unconditional guarantors of [a] corporate obligation [are] not affected 

by confirmation of [a] reorganization plan by which the corporate debt was 

restructured and reduced.” Id. at 223-224. Rather, the court held, a 

restructuring under the Bankruptcy Code “does not affect the responsibility 
J-A19019-14 

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of the [corporation’s] guarantors to make good on the unpaid portion of the 

guaranteed debts that remain after the arrangement is completed.” Id. at 

223 (internal quotations, citations, and corrections omitted). Thus, the court 

held that the Kimballs were liable for “the entire original corporate debt that 

was guaranteed by” them. Id. at 224. 

Results similar to that reached by the Stribling Flying Service Court 

are found throughout the courts of the United States. See J & B Inv.’s, 

LLC v. Surti, 258 S.W.3d 127, 130 (Tenn. Ct. App. 2007) (the confirmed 

plan declared that, if the debtor were to pay off its reduced and restructured 

debt, the debtor’s default would be cured and the payment would be “in full 

satisfaction of the obligation owed to [the creditor]”; nevertheless, the court 

held that “the discharge of [the debtors] in bankruptcy did not alter the 

liability of the [g]uarantors”); Austin Hardwoods, Inc. v. Vanden 

Berghe, 917 S.W.2d 320, 326 (Tex.App. 1995) (“modification of a corporate 

debt through a confirmed reorganization in bankruptcy does not constitute a 

material alteration of the underlying obligation so as to release a 

guarantor”); F.D.I.C. v. Lapierre, 144 B.R. 581, 584 (D.Me. 1992) (“the 

fact that under the reorganization plan the debtor may have been relieved 

from the consequences of its default does not mean that a default does not 

exist”); R.I.D.C. Indus. Dev. Fund v. Snyder, 539 F.2d 487, 492 (5th Cir. 

1976) (“bankruptcy courts may have jurisdiction over secured creditors in 

Chapter XI proceedings and, if the debt owed the secured creditor is altered 

by a Chapter XI arrangement, the secured creditor's guarantee is insulated 
J-A19019-14 

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by § 16 of the Bankruptcy Act [(which has been rewritten and codified at 11 

U.S.C. § 524(e))]”); In re Nine N. Church St., 82 F.2d 186 (9th Cir. 1936) 

(“By its guaranty, [the guarantor] promised to meet certain obligations and 

these are not affected by reorganization of this debtor. Any modification of 

[the debtor’s contract with the creditor] can only be justified by the 

bankruptcy power which extends only to the relief of insolvent or hard 

pressed debtors. If [the guarantor] is in that class, it must come into court 

and establish the fact. It [cannot] modify its obligations by the 

reorganization of other insolvents”). 

We conclude that, if confronted with the issue, our Supreme Court 

would hold consistent with the above cases and declare that, when a debt or 

loan has been restructured in bankruptcy, the restructuring does not affect 

the liability of a non-debtor surety or guarantor. One reason for our 

conclusion is because, as a bankruptcy court has explained, “a discharge is 

an involuntary release by operation of law of asserted and non-asserted 

claims by a creditor against any entity who has filed a petition under the 

Bankruptcy Code and who has abided by its rules.” In re Yellowstone 

Mountain Club, LLC, 460 B.R. 254, 268 n.4 (Bkrtcy.D.Mont. 2011) 

(emphasis added). Thus, since “[a] bankruptcy discharge arises by 

operation of federal bankruptcy law, not by contractual consent of the 

creditors[, a] creditor’s approval of the plan cannot be deemed an act of 

assent having significance beyond the confines of the bankruptcy 

proceedings.” In re Arrowmill Dev. Corp., 211 B.R. 497, 506 
J-A19019-14 

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(Bkrtcy.D.N.J. 1997) (internal quotations, citations, and corrections 

omitted). 

Further, any other result would cause our state courts to intrude upon 

federal bankruptcy law. Initially, if we were to hold that the restructuring of 

a loan under a bankruptcy plan implicitly released a non-debtor surety of 

its liability under a separate guaranty and suretyship agreement, our holding 

would very likely directly contravene 11 U.S.C. § 524(e). 11 U.S.C. 

§ 524(e) (the “discharge of the debtor does not affect the liability of any 

other entity on, or the property of any other entity for, such debt”).15 

Additionally, and as Appellant has rightly explained, if we were to hold 

that the loan restructuring in the case at bar released the Guarantors: 

No lender or creditor, whether they are the largest or 

smallest in a bankruptcy case, [would] negotiate with a 

bankruptcy debtor, let alone vote in favor of a plan, unless 

their guarantor participates in the bankruptcy and 

affirmatively “consents” to the deal. Imagine the leverage a 

guarantor and borrower could obtain in bankruptcy 

negotiations by having the guarantor threaten not to 

consent to plan modifications negotiated by the borrower 

and lender? A lender would be faced with a no-win situation 

of risking loss of its guaranty or ceding to the demands of 

its guarantor in exchange for consent. 

____________________________________________ 

15 Certainly, some courts and federal circuits hold that 11 U.S.C. § 524(e) 

prohibits a bankruptcy court from approving a reorganization plan that 

explicitly and knowingly releases claims against a non-debtor. See In re 

W. Real Estate Fund, Inc., 922 F.2d 592 (10th Cir. 1990); Matter of Zale 

Corp., 62 F.3d 746 (5th Cir. 1995); In re Lowenschuss, 67 F.3d 1394 (9th

Cir. 1995). 
J-A19019-14 

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Appellant’s Brief at 3. 

Such a result would greatly harm debtors and creditors alike and it 

would greatly impair a bankruptcy court’s ability to restructure contracts as 

part of the reorganization process, at least where a non-debtor surety or 

guarantor exists. See 11 U.S.C. § 1123 (“a plan shall . . . provide adequate 

means for the plan’s implementation, such as . . . curing or waiving of any 

default [and] extension of a maturity date or a change in an interest rate or 

other term of outstanding securities”); see also 11 U.S.C. § 1124 note 

(“Curing of the default and the assumption of the debt in accordance with its 

terms is an important reorganization technique for dealing with a particular 

class of claims, especially secured claims.”) 

Moreover, if we were to hold that a loan restructuring in bankruptcy 

affects the liability of a non-debtor surety or guarantor, we would encourage 

sharp practices in bankruptcy proceedings. Certainly, sureties and 

guarantors are often closely related to the borrower under the primary 

contract. Thus, if a borrower under the primary contract defaults and then 

declares bankruptcy, the borrower would have an incentive to restructure a 

loan under almost unachievable terms so that it could shield the guarantor 

from liability. Stated another way, even if the debtor-borrower has a belief 

that the terms of the loan will force it into liquidation, the debtor-borrower 

might still restructure its loan in such a manner, simply because it knows 

that the action will cure its individual surety or guarantor of liability under 

the suretyship or guaranty agreement. 
J-A19019-14 

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Finally, any other result would destroy one of the primary purposes of 

having a surety or guarantor. Indeed, with respect to a guarantor, the Ninth 

Circuit has explained: 

By its guaranty, [the guarantor] promised to meet certain 

obligations and these are not affected by reorganization of 

this debtor. . . . To allow a guaranty to be modified every 

time the principal debtor found itself in financial difficulties 

would be to make a guarantor’s obligation nominal only. 

The very purpose of, and only value in, a guaranty is as a 

protection against the principal’s inability to pay. Without a 

reorganization of the guarantor and a showing that its 

financial conditions justify relief from its obligations, the 

contract between the obligees and the guarantor is 

inviolate. 

In re Nine N. Church St., 82 F.2d at 188. 

In the case at bar, the Guarantors allegedly defaulted under the 

Guaranty and Suretyship Agreement in March 2010 – well before the 

underlying loan and credit facility were restructured, in bankruptcy, in 

October 2011. Further, and as a result of the alleged default, Appellant 

accelerated the Loan and declared the entire principal amount of the Loan 

and all interest, unpaid fees, and indebtedness to be “forthwith due and 

payable.” Letter, 3/22/10, at 2; Appellant’s Complaint, 10/4/10, at ¶ 26. It 

was at this point that the Guarantors became liable, under the Guaranty and 

Suretyship Agreement, for the entirety of their agreed upon indebtedness – 

and the Debtors’ subsequent bankruptcy filing does not affect Appellant’s 

ability to seek and obtain a judgment against the Guarantors for the alleged 

default. 
J-A19019-14 

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Moreover, even though Appellant and the Debtors restructured their 

Loan in the bankruptcy proceedings, the restructured loan documents 

neither released the Guarantors from their already-established liability nor 

cured the Guarantor’s default under the Guaranty and Suretyship 

Agreement. Indeed, both the Plan and the Confirmation Order declared that 

the Guarantors were not released as a result of the Debtors’ discharge. The 

Plan, 9/27/11, at ¶ 9.8; Confirmation Order, 10/4/11, at 8-9. 

Finally, our result is not changed by the mere fact that the Loan was 

restructured in documents that exist outside of the four corners of the Plan. 

To be sure, the Plan specifically declared that the execution and delivery of 

the Loan restructuring documents were a “condition precedent to the 

occurrence of the Effective Date” and that obligations under the restructured 

Loan documents were incorporated into the Plan. The Plan, 9/27/11, at 

¶ 4.3.3(vii) and “Schedule A.” Therefore, since the restructured Loan 

documents are a part of the Plan, the restructuring did not affect Appellant’s 

liability under the Guaranty and Suretyship Agreement or cure Appellant’s 

alleged default of that agreement.16

____________________________________________ 

16 The Guarantors claim that Appellant entered into a voluntary settlement 

agreement with the Debtors and, in doing so, voluntarily altered the terms 

of the Loan documents. See the Guarantors’ Brief, at 24; see also In re 

Arrowmill Dev. Corp., 211 B.R. at 503-507 (“When a release of liability of 

a nondebtor is a consensual provision . . . , agreed to by the effected 

creditor, it is no different from any other settlement or contract and does not 

implicate 11 U.S.C. § 524(e). A voluntary, consensual release is not a 

discharge in bankruptcy”). According to the Guarantors, since Appellant 

(Footnote Continued Next Page) 
J-A19019-14 

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Hence, we vacate the trial court’s order in part and remand for further 

proceedings. 

Order vacated in part. Case remanded. Jurisdiction relinquished. 

(Footnote Continued) _______________________ 

“voluntarily agreed with the Debtors to extinguish the Debtor Liabilities 

under the Original Loan Documents and replace and substitute them with 

materially modified liabilities under the New Agreement,” the Debtors were 

not “discharged” under the Bankruptcy Code. The Guarantors further claim 

that, as a result of Appellant’s voluntary action, the Guarantors’ obligations 

under the Guaranty and Suretyship Agreement have been extinguished. The 

Guarantors’ Brief at 21; see also Food Lion, Inc. v. S.L. Nusbaum Ins. 

Agency, Inc., 202 F.3d 223 (4th Cir. 2000) (“a release of the principal 

debtor by the creditor, by an absolute release of the debt, or by an 

obligatory extension of the time of payment, without the consent of the 

surety, releases the surety in toto. . . . [Therefore, when the debtors 

entered into a voluntary settlement with the creditor, releasing the debtors 

from the creditor’s claims, the creditor’s] release of [the debtors] bar[red] 

any claim against [the surety] . . . [b]ecause [the creditor] ha[d] no claim 

against [the debtors]”). 

The Guarantors’ claim is incorrect, as the Plan demanded the execution and 

delivery of the Loan documents as a “condition precedent to the occurrence 

of the Effective Date,” the Plan incorporated the obligations that were 

contained in the Loan restructuring agreements, and the Bankruptcy Court 

clearly discharged the Debtors pursuant to Section 1141(d)(1)(A) of the 

Bankruptcy Code. Thus, the restructured Loan documents do not constitute 

a “voluntary settlement” of Appellant’s underlying claims against the 

Debtors. Rather, the restructured Loan documents are part and parcel of 

the Plan itself. 
J-A19019-14 

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Judgment Entered. 

Joseph D. Seletyn, Esq. 

Prothonotary 

Date: 11/25/2014