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 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 CITIZENS BANK OF PENNSYLVANIA, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellant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 f rom 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”), i mplicitly denied Appellant’s cross-motion for summary judgment, and dismissed Ap pellant’s complaint against the Guarantors with prejudice. After caref ul review, we are constrained to vacate the learned trial court’s ord er in part and remand. Introduction By way of overview, this case arose from a lending relationship between Appellant, the Guarantors, and the followin g entities: BPP Illinois, LLC, BPP Iowa, LLC, BPP Michigan, LLC, BPP Minnesot a, LLC, BPP Texas, LLC, and BPP Wisconsin, LLC (hereinafter “the Debtors”). Briefly stated,J-A19019-14

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Appellant loaned the Debtors a substantial sum of m oney, 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 c redit facility (between Appellant and the Debtors) and in a Guaranty and Su retyship Agreement (between Appellant and the Guarantors). Appellant claimed that the Debtors and the Guaranto rs defaulted under the respective agreements; and, as a result o f the default, Appellant accelerated the loan. When neither the Debtors nor the Guarantors paid Appellant’s demand, Appellant filed suit against th e Debtors and Guarantors in the Court of Common Pleas of Allegheny County, c laiming breach of
contract. While the lawsuit was pending in the trial court, t he Debtors filed for bankruptcy protection under Chapter 11 of the Bankr uptcy Code. The trial court then stayed the entire underlying lawsuit pen ding the bankruptcy proceedings. In the Bankruptcy Court, the Debtors’ Confirmed Pla n declared that, “in full and final satisfaction” of Appellant’s cla im, the Debtors were required to sell all of their hotel properties and provide A ppellant with the proceeds from the sales. The Confirmed Plan also required t hat the Debtors execute and provide Appellant with amended loan documents, which restructured the loan. The Confirmed Plan then incorporated, into t he Plan, the obligations contained in the restructured loan documents.J-A19019-14

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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 exec uted in the Bankruptcy Court and in accordance with the Confirmed Plan – h ad “cured” the Guarantors’ earlier default under the Guaranty and Suretyship Agreement. The Guarantors also claimed that the restructured l oan documents had materially modified their obligations as a surety, and that the Guarantors were thus relieved of any liability under the Guara nty and Suretyship Agreement. The trial court granted the Guarantors’ summary jud gment motion and dismissed Appellant’s complaint against the Guarant ors. 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 D ebtors $66,000,000.00

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1 The complaint declared that each of the Debtors is a single-purpose, limited liability company, whose sole material asse t 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 Debt ors “are all owned and controlled, through a number of corporate intermedi aries, [by an individual named] Milton Fine.” Appellant’s Complaint, 10/4/1 0, at 3-4.J-A19019-14

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(hereinafter “the Loan”), so that the Debtors could renovate, reflag, purchase real property for, and operate the 22 hote ls that the Debtors owned. 3 Appellant’s Complaint, 10/4/10, at ¶ 13. The Loa n was secured by mortgages on the 22 hotels and by a February 8, 200 8 Security Agreement between Appellant and the Debtors. Id. at ¶ 19. The terms of the Loan were governed by a Credit Agr eement, which Appellant and the Debtors executed on February 8, 2 008. The Credit Agreement defined an “Event of Default” as includin g the failure of the Debtors to pay the principal or interest on the Loa n 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 occur red:

[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 th e Notes then outstanding and all interest accrued thereon, any fees and all other Indebtedness of [the Debtors] to [App ellant] hereunder and thereunder to be forthwith due and pa yable, 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 whi ch 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] l ocated in Wauwatosa, Wisconsin, which BPP Wisconsin holds as a leasehold .” Appellant’s Complaint, 10/4/10, at ¶ 14. Yet, for ease and cla rity of explanation, we will simply refer to the Debtors as the “owners” of the hotels.J-A19019-14

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Moreover, pursuant to the terms of the Credit Agree ment 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. U nder the Guaranty and Suretyship Agreement, the Guarantors agreed to beco me the “absolute and unconditional guarantors and sureties as though the y were primary obligors to [Appellant]” of, among other things: 1) “the pr ompt payment and performance when due” of a stated portion of the De btors’ principal payment obligations; and 2) the payment of all interest und er the Loan and the payment of all expenses Appellant might incur in en forcing 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

.

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4 The Credit Agreement defined the term “Loan Docume nts” in the following manner:

Loan Documents shall mean [the Credit Agreement], t he Guaranty Agreement, the Environmental Indemnity, th e Lease Assignments, the Mortgages, the Notes, the Se curity Agreement, the Collateral Assignments, agreements r elated 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.J-A19019-14

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The Guaranty and Suretyship Agreement between Appel lant and the Guarantors further provided: that Appellant may, a t 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, ex tend, modify, supplement, amend, release, alter or compro mise the terms of any or all of the Debtor Liabilities;” that the Guarant y and Suretyship Agreement was a continuing agreement and remained in force un til “all Debtor Liabilities and all other amounts payable under the Loan Docume nts have been paid and performed in full;” that the Guarantors’ liabil ity 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 D ebtor Liabilities, including “the amount, terms[,] and conditions thereof;” and, that the Guarantors waived “any defense arising by reason of any disabi lity or other defense whatsoever to the liability of any Debtor.” See id. at ¶¶ 2, 4, 11, 12, 13,

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5 Under the Guaranty and Suretyship Agreement, the t erm “Debtor Liabilities” included the “Principal Payment Liabil ities” and the “Cost Payment Liabilities.” In short, the “Principal Payment Lia bilities” are the Debtors’ existing and future liabilities and obligations wit h respect to the payment of the Loan principal (including “any extensions, modi fications, . . . and substitutions therefor . . . of any nature whatsoev er”); the “Cost Payment Liabilities” are the Debtors’ existing and future l iabilities and obligations with respect to the payment of the Loan interest and the cost of enforcing the agreements or collecting on the obligations (includ ing “any extensions, modifications, . . . and substitutions therefor . . . of any nature whatsoever”). Guaranty and Suretyship Agreement, 2 /8/08, at ¶ 1.J-A19019-14

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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 accordan ce with the terms of [the Guaranty and Suretyship] Agr eement 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 limita tion of (i) the liability of any Debtor, any Person assuming th e obligations of any Debtor under any of the Loan Doc uments or such Debtor’s estate in bankruptcy. . . . Id. at ¶ 16. Further, the Guaranty and Suretyship Agreement decl ared:
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 opt ion, be deemed to be forthwith due and payable for the purp oses of this Agreement and for determining the liability of the Guarantors hereunder, whether or not [Appellant] ha s any such rights against any other Obligor, and whether or not [Appellant] elects to exercise any rights or remedi es against any other Person or property including, without lim itation, any other Obligor.

____________________________________________ 6 The Guaranty and Suretyship Agreement defined an “ Event of Default” as including the following occurrences: 1) “[t]he Gua rantors shall fail to pay any principal of any Loan (including scheduled inst allments, mandatory prepayments or the payment due at maturity) or shal l fail to pay any interest on any Loan or any other amount owing here under or under the other Loan Documents within ten (10) days after suc h principal, interest or other amount becomes due in accordance with the ter ms hereof or thereof (whether at stated maturity, by acceleration or oth erwise)” 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.J-A19019-14

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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 t he 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 s cheduled 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 a nd all interest, unpaid fees, and indebtedness to be “forthwith due and pay able.” Letter, 3/22/10, at 2; Appellant’s Complaint, 10/4/10, at ¶ 26. When neither the Debtors nor the Guarantors paid wh at 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 ple adings to Appellant’s complaint and both sets of defendants d enied liability. Within the Guarantors’ answer and new matter, the Guaranto rs essentially claimed that they were not liable under the Guaranty and Su retyship Agreement because Appellant “orally modified the obligation u nderlying the Guaranty by consenting to the non-payment of interest” and, in the alternative, that theirJ-A19019-14

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obligations under the guaranty were discharged beca use 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 volunt ary petitions for relief under Chapter 11 of the Bankruptcy Code. Th e trial court thus stayed Appellant’s action against the Debtors, in accordan ce 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 other s with a similar legal or factual nexus to the debtor,” Appellant filed a mot ion in the trial court, requesting that the trial court sever its claims ag ainst 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 (3 rd Cir. 1997) (internal quotations, citations, and corrections omitted); Ap pellant’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 jurisdicti ons, including Pennsylvania, to sever claims against non-debtor de fendants to promote efficiency and procedural clarity going forward”). The Guarantors filed a response to Appellant’s moti on and argued that the trial court must deny the severance request bec ause the Debtors “are []J-A19019-14

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indispensable parties to the instant litigation” an d because Appellant’s contract action could not proceed without the Debto rs’ 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 t rial court entered an order granting the Guarantors’ motion to stay; the trial court ordered that the action was stayed in its entirety, pending a fi nal resolution of the bankruptcy proceeding. Trial Court Order, 7/13/11, at 1.

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7 But see Read v. Pa. Co. for Ins. on Lives and Grant ing Annuities , 12 A.2d 925, 927 (Pa. 1940) (“it is the law that a cre ditor may enforce his claim against the surety without first having proceeded a gainst 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 d ebtor and the third-party defendant that the debtor may be said to be the rea l party defendant and that a judgment against the third-party defendant w ill in effect be a judgment or finding against the debtor” and where t he stay protection “is essential to the debtor[’s] efforts [at] reorganiza tion”); see also Credit Alliance Corp. v. Williams , 851 F.2d 119, 122 (4 th Cir. 1988) (“[t]he very purpose of a guaranty is to assure the creditor tha t 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 inte rpreting [11 U.S.C. § 362] so as to stay [the creditor’s] action agains t the non-bankrupt guarantor when the defaulting debtor petitioned for bankruptcy”) (internal quotations, citations, and corrections omitted).J-A19019-14

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On September 27, 2011, the Debtors executed their S econd 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 r elease” of Appellant’s $67,400,835.06 secured claim, the Debtors would sel l 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 requi red that the Debtors execute and then deliver to Appellant a number of d ocuments, 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 amendm ent and ratification agreement. Id. at ¶ 4.3.3(vii) and “Schedule A.” As the Plan dec lared, the execution and delivery of the above documents was “ a condition precedent to the occurrence of the Effective Date” and the Pl an 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 de liver to [Appellant] no later than five [] Business Days fol lowing the

____________________________________________ 9 The Plan refers to Appellant’s $67,400,835.06 secu red claim as the “Lender Secured Claim.” The Plan, 9/27/11, at 14.J-A19019-14

- 12 - entry of the Confirmation Order, the documents list ed at Schedule A [10] attached hereto duly executed as appropriate. The execution and delivery of the sam e is a condition precedent to the occurrence of the Effect ive Date. Upon such delivery, the Reorganized Debtors shall c omply with all obligations stated therein, including any reporting requirements, even if any such obligation is not sp ecifically referenced in this Plan, in which case such obligat ion 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 omn ibus amendment and ratification agreement were amended l oan documents concerning Appellant’s Loan to the Debtors; the doc uments, in essence, restructured the Loan in order to effectuate the te rms of the Plan. As the trial court succinctly explained, the documents pro vided for an amended “note in an amount greater than the amount of the o riginal note, . . . included numerous material modifications to the fin ancial terms and [covenants] governing the creditor-debtor relations hip[,] . . . forced [the Debtors] to liquidate their assets in a relatively short time frame, and [declared that] the Debtors agreed to waive all def enses such as the right to seek bankruptcy relief.” Trial Court Opinion, 11/1 5/13, at 6. With respect to Appellant’s claims against the Guar antors, the Plan explicitly declared:

____________________________________________ 10 “Schedule A” is attached to the Plan and lists the Amended Credit Agreement, the Amended Note, and the omnibus amendm ent and ratification agreement. The Plan, 9/27/11, at “Sch edule A.”J-A19019-14

- 13 - 9.8 No Discharge of Guarantors. For the avoidance of doubt, nothing in this Plan and nothing in the Conf irmation Order serves or will serve to discharge any claim, cause of action, or right that any creditor or person has ag ainst any third person or guarantor for or on account of a cl aim against one or more of the Debtors, including, with out limitation, any claim that [Appellant] may have aga inst 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”), wh ich confirmed the Plan and declared that, except as otherwise provided in the Plan, the Debtors were discharged pursuant to section 1141(d)(1)(A) o f the Bankruptcy Code. Confirmation Order, 10/4/11, at 6-7. The Confirmat ion Order declared that, henceforth, “all [p]roperty of the Debtors and thei r Estates vest[s] in the Reorganized Debtors.” Id. at 7. Moreover, the Confirmation Order declared that the Debtors’ discharge did not affect the liab ility of the Guarantors. The order declared:

the Plan and [the Confirmation] Order are wholly wi thout prejudice to all claims, causes of action, defenses , and rights of [Appellant] as against the Guarantors . .

. including, without limitation . . . all matters ass erted or assertable in Case Number GD 10-18621 pending in th e Civil Division, Court of Common Pleas of Allegheny County, Pennsylvania. Id. at 9. Finally, the Confirmation Order declared that the r estructuring of the Loan was simply a “modification and amendment” of t he Lender SecuredJ-A19019-14

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Claim and was not a “new extension of credit.” Wit h respect to this issue, the Confirmation Order declared:

that the credit facility described in the Credit Ag reement is a modification and amendment of the Lender Secured Cl aim pursuant to and as defined in the Plan and is not i n any way a new extension of credit, an accord and satisfacti on, or other arrangement that would impair in any way [Appellant’s] right to assert claims against any no n-Debtor party as to the Lender Secured Claim, nor would it or this Order impair in any way any non-Debtor’s right to a ssert any defense thereto, including, without limitation, any defense relating to or arising from the modificatio n and amendment of the Lender Secured Claim[.] Id. at 8. On February 13, 2012, the trial court issued an ord er dissolving the stay with respect to Appellant’s case against the G uarantors; 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 a nd the Guarantors filed cross-motions for summary judgment. Within A ppellant’s summary judgment motion, Appellant claimed that it was enti tled to summary judgment, in its favor, with respect to the Guarant ors’ liability. According to Appellant, the principals of the Guarantors had adm itted that, as of March

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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 wi th prejudice. Appellant’s Praecipe to Discontinue, 10/20/11, at 1.J-A19019-14

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23, 2010, the Guarantors “had not made their most r ecently required interest payments and swap payments.” Appellant’s Brief in Support, 3/30/12, at 11. Since this constituted a default u nder the Guaranty and Suretyship Agreement and since this default caused Appellant to accelerate the Loan and demand that the Guarantors pay their o bligation in full, Appellant claimed that it was entitled to a judgmen t 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, wi thin the Guarantors’ answer and new matter, the Guarantors had claimed t hat Appellant “orally modified the obligation underlying the Guaranty by consenting to the nonpayment of interest” and that Appellant impaired th e value of the collateral. See , e.g. , The Guarantors’ Answer and New Matter, 11/1/10, a t ¶ 20. Appellant, however, claimed that these two defenses failed as a matter of law. With respect to the alleged forbearance agree ment, Appellant claimed that this defense failed because the alleged oral f orbearance: 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 occ urred after the Guarantors’ default; does not discharge the Guarant ors because the alleged modification was not a material change that substan tially increased the Guarantors’ risk; and, was consented to by the Guar antors. Appellant’s BriefJ-A19019-14

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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” defe nse, Appellant claimed that this defense failed because the Guarantors sig ned an unconditional guaranty and thus “waived the right to participate in [Appellant’s] collateral.” Id. at 23-25. Therefore, Appellant claimed that since the Guarant ors admitted to being in default and since the Guarantors’ defenses failed as a matter of law, Appellant was entitled to summary judgment in its f avor. Id. The Guarantors responded to Appellant’s motion for summary judgment and primarily argued that the Debtors’ ban kruptcy – and the resulting Plan, amended loan agreements, and Confir mation Order – had “cured” the Guarantors’ original default. The Guar antors argued:

the Debtors filed bankruptcy petitions[,] a Confirm ation Order confirming a “consensual” Plan was entered[,] and the Debtors and [Appellant] entered into [an Amende d Credit] Agreement and executed the New Loan Documen ts to memorialize their agreement. As a matter of law , the Original Loan has been replaced and no longer exist s. The Guaranty provides that the [Guarantors] originally were liable “as though they were primary obligors to [Ap pellant].” Since [the Guarantors] . . . stand in the shoes of the Debtors, when the Debtors’ primary liability went a way, so did the alleged liability of the [Guarantors]. The Guarantors’ Response, 5/7/12, at 7. Moreover, the Guarantors argued that: they never a dmitted that they were in default of the Guaranty and Suretyship Agre ement; the Bankruptcy Court already determined that there was a valid for bearance agreement andJ-A19019-14

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Appellant is collaterally estopped from claiming ot herwise; the forbearance agreement is otherwise enforceable; and, the Guaran ty and Suretyship Agreement does not permit the impairment of collate ral. Id. at 8-11 and 18-23. The Guarantors also filed a cross-motion for summar y judgment and claimed that they were entitled to a judgment as a matter of law because “the Plan, the [Amended] Credit Agreement[,] and th e New Note modify and restate the Original Credit Agreement and Original Note in their entirety, such that nothing of the Original Loan Documents re main[].” The Guarantors’ Motion for Summary Judgment, 3/30/12, a t 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 un der the Amended Credit Agreement, as the new contractual terms “materially increased [the Guarantors’] risk” – thus discharging their obligat ions 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, the re has been a material modification in the creditor-debtor relationship an d 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 tha t granted the Guarantors’J-A19019-14

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motion for summary judgment, implicitly denied Appe llant’s cross-motion for summary judgment, and dismissed Appellant’s complai nt against the Guarantors with prejudice. The trial court reasone d:

The Bankruptcy agreement essentially restructured a nd reorganized the creditor-debtor relationship, and e ffectively discharged the Debtors as they stood under the Orig inal Credit Agreement[. T]he consent agreement in the bankruptcy action [thus] renders the Original Credi t Agreement null and void. As [the Guarantors’ were] not [] part[ies] to the [Amended] Credit Agreement, and si nce the Original Credit Agreement no longer exists, any lia bility to the [G]uarantors for default events under the Origi nal Credit Agreement [is] extinguished. Trial Court Opinion, 11/15/13, at 9. Appellant filed a timely notice of appeal and now r aises the following claims to this Court:

1. Whether modifications to the loan entered into under a confirmed plan of reorganization in federal bankrup tcy proceeding discharged the [Guarantors’] obligations under the guaranty? 2. Whether the [Guarantors] consented to modificati ons to the loan relationship contained in the plan and ame nded and restated credit agreement pursuant to the clear and unambiguous advance consents and waivers of suretys hip defenses in the guaranty? 3. Whether the bankruptcy plan and amended and res tated credit agreement constituted (1) material modificat ions to the debtor-creditor relationship, (2) which substan tially 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

- 19 - 4. Whether the amended and restated credit agreemen t is a single integrated document that precludes enforceme nt of the [Guarantors’] guaranty? 5. Whether the [Guarantors’] guaranty was discharge d as to the existing obligations of the [Debtors] under the plan and amended and restated credit agreement where the gua ranty expressly guarantees all present and future liabili ties of [the Debtors] to Appellant? Appellant’s Brief at 4-5. Analysis Initially, we conclude that Appellant waived any po tential claim that the trial court erred when it implicitly denied App ellant’s cross-motion for summary judgment. Within Appellant’s brief to this Court, Appellant has focused its attention on the specific portion of th e trial court’s order that granted the Guarantors’ summary judgment motion. M oreover, even though Appellant declares that we should direct that summa ry judgment be entered in its favor, Appellant has done so in conclusory f ashion and has failed to establish that there are no genuine issues of mater ial fact with respect to the claims raised in its own summary judgment motion. In particular, Appellant has not made any argument that the Guarantors’ actu al default has been established as a matter of law or that the Guaranto rs’ 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 aut hority or fails to develop theJ-A19019-14

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issue in any other meaningful fashion capable of re view, that claim is waived. It is not the obligation of an appellate c ourt to formulate appellant’s arguments”) (internal quotations, citations, and co rrections omitted). Nevertheless, we conclude that Appellant’s first cl aim on appeal entitles Appellant to relief. Specifically, we hol d that the loan modifications entered into by the Debtors pursuant to the confirm ed reorganization plan in the federal bankruptcy proceedings (and Appellant’s consent thereto) do not relieve the Guarantors of their obligations under t he Guaranty and Suretyship Agreement. We thus vacate the trial cou rt’s order in part and remand. 12 In the case at bar, the trial court granted the Gua rantors’ motion for summary judgment and dismissed Appellant’s complain t. We note:

Our scope of review of a trial court’s order granti ng or denying summary judgment is plenary, and our standa rd of review is clear: the trial court’s order will be r eversed only where it is established that the court committed an error of law or abused its discretion. Summary judgment is appropriate only when the recor d clearly shows that there is no genuine issue of mat erial fact and that the moving party is entitled to judgment a s a matter of law. The reviewing court must view the r ecord in the light most favorable to the nonmoving party and resolve all doubts as to the existence of a genuine issue o f 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 Appella nt’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 – an d the resulting Plan, amended loan agreements, and Confirmation Order – c ured the Guarantors’ original, alleged default under the Guaranty and Su retyship Agreement. According to the trial court, since Appellant and t he Debtors executed amended loan documents during the bankruptcy procee ding, the “Original Credit Agreement no longer exists [and] any liabili ty 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 con clusion. While we acknowledge the hard work and thoughtful considerat ion invested by the trial court in this case, our own review of the iss ues raised on appeal begins with, and focuses upon, the independent obligations of the Guarantors under their agreement with Appellant. As we develop in g reater detail below, although Pennsylvania law is silent on the issue, w e conclude that the restructuring of the Debtors’ loan in bankruptcy – and the Debtors’ resulting discharge – neither cured the Guarantors’ earlier d efault nor defeated the Guarantors’ promises on their own underlying obliga tions. Section 524(e) of the Bankruptcy Code generally pro vides that the “discharge of the debtor does not affect the liabil ity 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[, suret ies,] or guarantors.” 13 In re American Hardwoods, Inc. , 885 F.2d 621, 625 (9 th Cir. 1989) (internal

____________________________________________ 13 We note that the Restatement (Third) of Suretyship and Guaranty defines a “guarantor” and a “surety” in the following manne r:

if the parties to a contract identify one party as a “guarantor” or the contract as a “guaranty,” the pa rty so identified is a secondary obligor and the secondary obligation is, upon default of the principal obligo r on the underlying obligation, to satisfy the obligee's cla im 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 par ty as a “surety,” or the contract as a “suretyship” contrac t, the party so identified is a secondary obligor who is s ubject to a secondary obligation pursuant to which the secondar y obligor is jointly and severally liable with the pr incipal 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 d istinction 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 mad e by one person to answer for the default of another shall subject suc h 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 por tion of such agreement intended to modify the rights and liabilities of su retyship shall contain in substance the words: ‘This portion of the agreemen t is not intended to impose the liability of suretyship’”).J-A19019-14

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quotations and citations omitted). Rather, the “di scharge in bankruptcy does not extinguish the debt itself, but merely rel eases the debtor from personal liability for the debt[; thus,] . . . the debt still exists and can be collected from any other entity that might be liabl e.” Matter of Edgeworth , 993 F.2d 51, 53 (5 th Cir. 1993). Moreover, the vast majority of courts who have conf ronted the issue have also held that, when a debtor’s loan is restru ctured 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

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14 Within the Guarantors’ brief to this Court, the Gu arantors continuously refer to the restructured Loan as a “new” loan. Th e Guarantors’ characterization of the restructured Loan as a “new ” loan is, however, contrary to the explicit terms of the Bankruptcy Co urt’s Confirmation Order. Indeed, the Confirmation Order declares:

ORDERED that the credit facility described in the C redit 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 th at would impair in any way [Appellant’s] right to assert cla ims against any non-Debtor party as to the Lender Secur ed Claim, nor would it or this Order impair in any way any nonDebtor’s right to assert any defense thereto, inclu ding, without limitation, any defense relating to or aris ing from the modification and amendment of the Lender Secure d 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 (5 th Cir. 1984). The corporation filed a bankruptcy petition under Chapt er 11 of the Bankruptcy Code and the bankruptcy court confirmed the corpora tion’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, t he Kimballs claimed in court that the confirmed bankruptcy plan had aff ected their own obligations as guarantors of the debt. Of relevanc e 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 thei r 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 tha t the “the obligation[s] of . . . unconditional guarantors of [a] corporate obl igation [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 a ffect the responsibilityJ-A19019-14

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of the [corporation’s] guarantors to make good on t he unpaid portion of the guaranteed debts that remain after the arrangement is completed.” Id. at 223 (internal quotations, citations, and correction s 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 State s. See J & B Inv.’s, LLC v. Surti , 258 S.W.3d 127, 130 (Tenn. Ct. App. 2007) (the co nfirmed plan declared that, if the debtor were to pay off i ts reduced and restructured debt, the debtor’s default would be cured and the p ayment would be “in full satisfaction of the obligation owed to [the credito r]”; nevertheless, the court held that “the discharge of [the debtors] in bankru ptcy did not alter the liability of the [g]uarantors”); Austin Hardwoods, Inc. v. Vanden Berghe , 917 S.W.2d 320, 326 (Tex.App. 1995) (“modificatio n of a corporate debt through a confirmed reorganization in bankrupt cy 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 (5 th Cir. 1976) (“bankruptcy courts may have jurisdiction ove r secured creditors in Chapter XI proceedings and, if the debt owed the se cured creditor is altered by a Chapter XI arrangement, the secured creditor's guarantee is insulatedJ-A19019-14

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by § 16 of the Bankruptcy Act [(which has been rewr itten and codified at 11 U.S.C. § 524(e))]”); In re Nine N. Church St. , 82 F.2d 186 (9 th Cir. 1936) (“By its guaranty, [the guarantor] promised to meet certain obligations and these are not affected by reorganization of this de btor. Any modification of [the debtor’s contract with the creditor] can only be justified by the bankruptcy power which extends only to the relief o f insolvent or hard pressed debtors. If [the guarantor] is in that cla ss, it must come into court and establish the fact. It [cannot] modify its obl igations 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 decl are that, when a debt or loan has been restructured in bankruptcy, the restr ucturing does not affect the liability of a non-debtor surety or guarantor. One reason for our conclusion is because, as a bankruptcy court has ex plained, “a discharge is

an involuntary release by operation of law of asserted and non-asserted claims by a creditor against any entity who has fil ed 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 disc harge arises by operation of federal bankruptcy law, not by contrac tual consent of the creditors[, a] creditor’s approval of the plan cann ot be deemed an act of assent having significance beyond the confines of t he bankruptcy proceedings.” In re Arrowmill Dev. Corp. , 211 B.R. 497, 506J-A19019-14

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(Bkrtcy.D.N.J. 1997) (internal quotations, citation s, and corrections omitted). Further, any other result would cause our state cou rts to intrude upon federal bankruptcy law. Initially, if we were to h old that the restructuring of a loan under a bankruptcy plan implicitly released a non-debtor surety of its liability under a separate guaranty and suretys hip agreement, our holding would very likely directly contravene 11 U.S.C. § 5 24(e). 11 U.S.C. § 524(e) (the “discharge of the debtor does not aff ect the liability of any other entity on, or the property of any other entit y for, such debt”). 15 Additionally, and as Appellant has rightly explaine d, if we were to hold that the loan restructuring in the case at bar rele ased the Guarantors:

No lender or creditor, whether they are the largest or smallest in a bankruptcy case, [would] negotiate wi th a bankruptcy debtor, let alone vote in favor of a pla n, 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 t o consent to plan modifications negotiated by the bor rower and lender? A lender would be faced with a no-win situation of risking loss of its guaranty or ceding to the de mands of its guarantor in exchange for consent.

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15 Certainly, some courts and federal circuits hold t hat 11 U.S.C. § 524(e) prohibits a bankruptcy court from approving a reorg anization plan that explicitly and knowingly releases claims against a non-debtor. See In re W. Real Estate Fund, Inc. , 922 F.2d 592 (10 th Cir. 1990); Matter of Zale Corp. , 62 F.3d 746 (5 th Cir. 1995); In re Lowenschuss , 67 F.3d 1394 (9 th Cir. 1995).J-A19019-14

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Appellant’s Brief at 3. Such a result would greatly harm debtors and credit ors alike and it would greatly impair a bankruptcy court’s ability t o 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 adeq uate means for the plan’s implementation, such as . . . curing or waiving of any default [and] extension of a maturity date or a cha nge 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 d ebt 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 restructur ing in bankruptcy affects the liability of a non-debtor surety or gua rantor, we would encourage sharp practices in bankruptcy proceedings. Certain ly, sureties and guarantors are often closely related to the borrowe r under the primary contract. Thus, if a borrower under the primary co ntract defaults and then declares bankruptcy, the borrower would have an inc entive to restructure a loan under almost unachievable terms so that it cou ld shield the guarantor from liability. Stated another way, even if the de btor-borrower has a belief that the terms of the loan will force it into liqui dation, 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 c ertain obligations and these are not affected by reorganiz ation of this debtor. . . . To allow a guaranty to be modif ied every time the principal debtor found itself in financial difficulties would be to make a guarantor’s obligation nominal o nly. 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 obliga tions, 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 defaul ted under the Guaranty and Suretyship Agreement in March 2010 – w ell before the underlying loan and credit facility were restructur ed, in bankruptcy, in October 2011. Further, and as a result of the alle ged default, Appellant accelerated the Loan and declared the entire princi pal 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 Compl aint, 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 agr eed upon indebtedness – and the Debtors’ subsequent bankruptcy filing does not affect Appellant’s ability to seek and obtain a judgment against the G uarantors for the alleged default.J-A19019-14

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Moreover, even though Appellant and the Debtors res tructured their Loan in the bankruptcy proceedings, the restructure d loan documents neither released the Guarantors from their already- established liability nor cured the Guarantor’s default under the Guaranty an d Suretyship Agreement. Indeed, both the Plan and the Confirmat ion Order declared that the Guarantors were not released as a result of the Debtors’ discharge. T he Plan, 9/27/11, at ¶ 9.8; Confirmation Order, 10/4/1 1, 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 obligati ons 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 th e restructured Loan documents are a part of the Plan, the restructuring did not affect Appellant’s liability under the Guaranty and Suretyship Agreeme nt 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, volunt arily 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 . . . , agree d to by the effected creditor, it is no different from any other settlem ent or contract and does not implicate 11 U.S.C. § 524(e). A voluntary, consens ual release is not a discharge in bankruptcy”). According to the Guaran tors, since Appellant (Footnote Continued Next Page)J-A19019-14

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Hence, we vacate the trial court’s order in part an d remand for further proceedings. Order vacated in part. Case remanded. Jurisdictio n relinquished.

(Footnote Continued) _______________________ “voluntarily agreed with the Debtors to extinguish the Debtor Liabilities under the Original Loan Documents and replace and s ubstitute them with materially modified liabilities under the New Agree ment,” the Debtors were not “discharged” under the Bankruptcy Code. The Gu arantors further claim that, as a result of Appellant’s voluntary action, the Guarantors’ obligations under the Guaranty and Suretyship Agreement have be en extinguished. The Guarantors’ Brief at 21; see also Food Lion, Inc. v. S.L. Nusbaum Ins. Agency, Inc. , 202 F.3d 223 (4 th Cir. 2000) (“a release of the principal debtor by the creditor, by an absolute release of t he debt, or by an obligatory extension of the time of payment, withou t the consent of the surety, releases the surety in toto . . . . [Therefore, when the debtors entered into a voluntary settlement with the credit or, 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 dem anded the execution and delivery of the Loan documents as a “condition prec edent to the occurrence of the Effective Date,” the Plan incorporated the o bligations that were contained in the Loan restructuring agreements, and the Bankruptcy Court clearly discharged the Debtors pursuant to Section 1141(d)(1)(A) of t he Bankruptcy Code. Thus, the restructured Loan docum ents do not constitute a “voluntary settlement” of Appellant’s underlying claims against the Debtors. Rather, the restructured Loan documents a re 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