United States Court of Appeals

for the Fifth Circuit ____________

No. 23-60363

____________

North American Savings Bank, F.S.B., 

Plaintiff—Appellee, 

versus

Patrick Nelson, 

Defendant—Appellant. 

______________________________

Appeal from the United States District Court 

for the Northern District of Mississippi

USDC No. 3:21-CV-184

______________________________

Before Clement, Engelhardt, and Wilson, Circuit Judges.

Cory T. Wilson, Circuit Judge: 

This diversity case arising under Mississippi law hinges on whether a 

loan guaranty was properly assigned to Plaintiff North American Savings 

Bank, FSB (NASB), such that NASB could sue guarantors, and brothers,

Patrick and Brian Nelson for its breach. Assuming the guaranty was properly 

assigned, another issue is whether Patrick could assert certain equitable 

defenses to defeat liability. The district court entered summary judgment for 

NASB, concluding that the loan guaranty was properly assigned and that 

Patrick could not assert equitable defenses belonging to the borrower. The 

United States Court of Appeals

Fifth Circuit

FILED

June 4, 2024

Lyle W. Cayce

Clerk

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district court via a separate order awarded NASB nearly $6 million in 

damages. We affirm.

I. 

NB Taylor Bend, DST (Taylor Bend), a Delaware statutory trust, 

borrowed $13 million from Prudential Mortgage Capital Company, LLC 

(Prudential) to acquire property, including Taylor Bend Apartments (the 

Apartments), in Lafayette County, Mississippi. The financing package

(collectively, the Loan Documents)1 was fully executed, with Patrick signing 

on behalf of Taylor Bend, in January 2015. Taylor Bend pledged the 

Apartments as security for the loan. 

Patrick and Brian Nelson both executed an Indemnity and Guaranty 

Agreement (the Guaranty) in December 2014, personally guaranteeing the 

loan. The Guaranty provided:

This is a guaranty of payment and performance and not of

collection. The liability of [the Nelsons] under this [Guaranty]

shall be direct and immediate and not conditional or contingent 

upon the pursuit of any remedies against Borrower or any other 

person (including, without limitation, other guarantors, if any), 

nor against the collateral for the Loan. Guarantors waive any 

right to require that an action be brought against Borrower or 

any other person . . . .

In the event, on account of any provisions of the U.S. 

Bankruptcy Code . . . or any other debtor relief law . . . [that] 

Borrower shall be relieved of or fail to incur any debt, obligation 

or liability as provided in the Loan Documents, [the Nelsons] 

shall nevertheless be fully liable therefor. In the event of an 

_____________________

1 Most relevant here, the Loan Documents included a Loan Agreement, 

Promissory Note, Deed of Trust (the Security Instrument), and, as will be discussed infra, 

the Guaranty executed by the Nelsons. 

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Event of Default under the Loan Documents, Lender shall 

have the right to enforce its rights, powers and remedies . . . in 

any order . . . .

If the indebtedness and/or obligations guaranteed hereby are 

partially paid or discharged by reason of the exercise of any of 

the remedies available to Lender, this [Guaranty] shall 

nevertheless remain in full force and effect, and [the Nelsons] 

shall remain liable for all remaining indebtedness and 

obligations . . . .

The Guaranty also included a “No Limitation on Liability” clause:

[Nelsons] hereby consent and agree that Lender may at any 

time . . . without further consent from [the Nelsons] do any of 

the following events, and the liability of [the Nelsons] under 

this [Guaranty]shall be unconditional and absolute and shall in 

no way be impaired or limited by any of the following events[:]

. . .

any sale, assignment or foreclosure of the Note, the Security 

Instrument or any of the other Loan Documents or any sale or 

transfer of the [p]roperty. 

. . .

No such action which Lender shall take or fail to take in 

connection with the Loan Documents or any collateral for the 

Loan, nor any course of dealing with Borrower or any other 

person, shall limit, impair or release [the Nelsons’] obligations 

hereunder, affect this [Guaranty] in any way or afford [the 

Nelsons] any recourse against Lender.

The Guaranty also extended to bind “the heirs, personal representatives, 

successors and assigns” of the Nelsons and benefit the “respective heirs, 

successors and assigns [of the Lender].”

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The Loan Agreement expressly included “the Indemnity and 

Guaranty Agreement given to Lender by Patrick Nelson and Brian Nelson”

among the Loan Documents. The Loan Agreement also provided that in the 

event of “any petition for bankruptcy . . . [or] reorganization . . . by a 

Borrower,” the loan “shall be fully recourse to Borrower,” i.e., Prudential 

could accelerate the full balance owed. And the Loan Agreement stated that 

such an event would not “reduce, release, relieve, limit or impair in any way 

whatsoever the [Guaranty] . . . .” Moreover, the Promissory Note, which is 

separately referenced in the Guaranty, stated that “[a]ll of the terms and 

provisions of the Loan Agreement . . . and other Loan Documents are 

incorporated herein by reference.”

After the Loan Documents were executed, Prudential assigned the 

loan to Liberty Island Group I, LLC (Liberty) via an “Omnibus Assignment”

that referenced the Loan Documents: 

PRUDENTIAL [] . . . does hereby absolutely sell, transfer, 

assign, set over and convey to LIBERTY [] . . . all right, title 

and interest of Assignor in and to the Mortgage Loan identified 

on the Mortgage Loan Schedule . . . including:

1. The Mortgage Loan Documents related to the mortgage loan 

. . . evidenced and secured by, among other things, that certain 

Deed of Trust and Assignment of Rents and Leases and 

Security Agreement executed by [Taylor Bend], dated January 

16, 2015.

. . . 

2. Each item constituting the Loan Origination File with 

respect to the Mortgage Loan (in each case, to the extent of 

Assignor’s right, title and interest therein and to the extent 

assignable)[.]

Liberty, in turn, assigned the loan to NASB. 

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By May 2020, Taylor Bend struggled to find tenants for the 

Apartments due to the COVID-19 pandemic. Taylor Bend and the Nelsons 

informed NASB of their resulting financial problems, and the parties 

executed a forbearance agreement “whereby NASB agreed to suspend debt 

service payments from the months of June 2020, July 2020, and August 

2020.”

But Taylor Bend’s difficulties continued well after those three 

months. In May 2021, NASB declared Taylor Bend to be in default after the 

borrower continually failed to make timely loan payments. That June, after 

Taylor Bend failed to cure its default, NASB exercised its right to accelerate 

the debt, making the $12,375,074.16 loan balance due immediately. 

In August 2021, Taylor Bend converted its business to a limited 

liability company, renamed NB Taylor Bend 2, LLC, pursuant to § 18-214 of 

the Delaware Limited Liability Company Act. See Del. Code Ann. 6

§ 18-214(f) (2012).2 Such a conversion was contemplated in the Loan 

Agreement “upon the notice from Lender that an Event of Default ha[d]

occurred and [was] continuing,” or that Taylor Bend was in imminent risk of 

default. After conversion, Taylor Bend filed for Chapter 11 bankruptcy 

protection in the United States Bankruptcy Court for the Northern District 

of Mississippi. NASB quickly moved for relief from the automatic stay in the 

bankruptcy case and demanded payment from the Nelsons under the 

Guaranty in the amount of $12,519,746.73. After the Nelsons failed to 

respond, NASB filed this action against them in the United States District 

_____________________

2 The Delaware law allows for entity conversion to a limited liability company and 

provides that “all rights of creditors and all liens upon any property of such other entity” 

are “preserved unimpaired . . . and may be enforced against [the new LLC] to the extent as 

if said debts, liabilities and duties had originally been incurred or contracted by in its 

capacity as a domestic limited liability company.” § 18-214(f). 

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Court for the Northern District of Mississippi, asserting claims for breach of 

the Guaranty, for recovery of the $12,519,746.73 loan balance, and for 

declaratory judgment. 

In September 2021, the bankruptcy court lifted the automatic stay,

and NASB proceeded with a foreclosure sale of the Apartments. Nor-Am 

Service Corporation (Nor-Am), an entity affiliated with NASB, acquired the 

Apartments for $8 million. A few months later, Nor-Am sold the property 

to a third party, Kirkland Properties (Kirkland), for $10.6 million. NASB

credited the $8 million in proceeds from the foreclosure sale to Nor-Am 

against the Nelsons’ debt; it did not credit any proceeds from the second sale 

to Kirkland. 

After completing the foreclosure sale to Nor-Am, NASB moved for

partial summary judgment, seeking a declaration of liability on its breach-ofguaranty claim against the Nelsons. Brian also filed a motion for summary 

judgment against Patrick. Brian asserted that his interest in the Apartments 

had been assigned to Patrick after the brothers separated their business 

interests in 2018 and that Patrick had agreed to indemnify Brian for any 

adverse judgment, costs, fees and expenses stemming from litigation over the 

Apartments. 

The district court entered partial summary judgment for NASB, 

holding the Nelsons “breached the [G]uaranty and thus owe[d] to [NASB] 

the amount remaining due on the subject loan.” The court determined that 

the Guaranty was “freely assignable” and that Prudential adequately 

assigned all of its rights and interests to Liberty, which in turn assigned all of 

its rights and interests to NASB, including those conferred by the Guaranty. 

And the court concluded that the defenses raised by the Nelsons were 

“unavailable given the borrower’s absence from this litigation.” Finally, the 

court granted Brian’s motion for summary judgment against Patrick, ruling 

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that the indemnity agreement between the brothers was valid and binding and 

that Patrick was contractually required to indemnify Brian for “any and all 

obligations arising out of or relating to this litigation.”3

 The court also 

granted NASB’s request for a subsequent hearing to determine NASB’s and 

Brian’s damages.

After the court heard argument on damages, it issued a subsequent 

memorandum opinion, awarding NASB nearly $6 million in damages plus 

post-judgment interest. In so doing, the court rejected the Nelsons’

argument that NASB was required to credit $2.6 million from the sale of the 

Apartments to Kirkland as an offset against the Nelson’s debt: 

[NASB] was not required to foreclose on the [Apartments] at 

all and could have instead simply have filed suit regarding the 

loan . . . . [A]ll that was required of [NASB], given that 

[NASB] chose to foreclose on the [Apartments], was to give 

[the Nelsons] credit for the price paid at the foreclosure sale. 

[NASB] did so. [The Nelsons’] argument that they are entitled 

to a reduction in the amount of damages because the 

[Apartments] [were] subsequently resold is not supported by 

Mississippi law and is without merit. 

The court also granted Brian’s unopposed motion to require Patrick to 

indemnify additional costs stemming from the litigation. 

Patrick now appeals, contending that there is a genuine dispute of 

material fact as to whether the Guaranty was validly assigned to NASB. 

Patrick alternatively asserts that the district court erred by not considering

his equitable defenses to enforcement of the Guaranty. Finally, Patrick

_____________________

3 Patrick does not contest the district court’s holding as to the indemnity agreement 

or its ruling in favor of Brian. 

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argues that the district court erred by not reducing the debt owed to NASB

by an additional $2.6 million, from the sale to Kirkland. 

II. 

“We review grants of summary judgment de novo, applying the same 

standard as the district court.” In re La. Crawfish Producers, 852 F.3d 456, 

462 (5th Cir. 2017). “The court shall grant summary judgment if the movant 

shows that there is no genuine dispute as to any material fact and the movant 

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “All 

reasonable inferences must be viewed in the light most favorable to the party 

opposing summary judgment, and any doubt must be resolved in favor of the 

non-moving party.” La. Crawfish, 852 F.3d at 462. A “dispute about a 

material fact is genuine if the evidence is such that a reasonable jury could 

return a verdict for the nonmoving party.” Parrish v. Premier Directional 

Drilling, L.P., 917 F.3d 369, 378 (5th Cir. 2019) (alterations accepted) 

(quotation marks omitted). “If the evidence is merely colorable, or is not 

significantly probative, summary judgment may be granted.” Id. (quoting 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986)). 

Sitting in diversity, we apply the substantive law of the forum state, 

here, Mississippi. Learmonth v. Sears, Roebuck & Co., 710 F.3d 249, 258 (5th 

Cir. 2013); see also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78–80 (1938). A 

district court’s determination of state law is reviewed de novo. Learmonth, 

710 F.3d at 258. We distill state law by looking to the decisions of the state’s 

highest court. Meador v. Apple, Inc., 911 F.3d 260, 264 (5th Cir. 2018). But

when no case law from the state’s supreme court is on offer, we may look to 

decisions of the intermediate appellate court, barring a reason to think the 

state supreme court would decide otherwise. Id. 

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A.

Patrick contends that there is a genuine dispute of material fact as to 

whether Prudential validly assigned the Guaranty to Liberty, and by 

extension, whether Liberty validly assigned it to NASB, such that NASB may 

validly assert an action pursuant to the Guaranty. Patrick urges that the 

“omnibus” assignment from Prudential to Liberty neither encompassed 

Prudential’s interest in Patrick’s Guaranty nor purported to assign that 

interest.

We discern no genuine dispute of material fact. The Guaranty plainly

states that it binds “Guarantors and . . . assigns of Guarantors and shall inure 

to the benefit of [Prudential] and the . . . assigns [of Prudential].” And 

Prudential assigned its “right, title, and interest” in the Loan Documents,

which the district court correctly found include the Guaranty, to Liberty. 

Indeed, the Loan Agreement explicitly references “the Indemnity and 

Guaranty Agreement given to Lender [i.e., Prudential] by Patrick Nelson and 

Brian Nelson” as part of the financing package. Then, Liberty validly 

assigned the loan to NASB, which Patrick does not contest, leaving NASB to 

stand in Prudential’s stead vis-à-vis the Loan Documents and the Guaranty. 

Patrick’s contrary contentions fail to raise a genuine dispute such that a 

“reasonable jury could return a verdict for [him].” Parrish, 917 F.3d at 378.

B. 

In the alternative, Patrick contends the district court erred by 

declining to consider his equitable defenses to NASB’s enforcing the 

Guaranty, specifically, breach of the forbearance agreement, good faith and 

fair dealing, and negligent loan administration. But the district court 

correctly relied on Brown v. Hederman Brothers, LLC, 207 So. 3d 698 (Miss. 

Ct. App. 2016), to hold that the “equitable defenses raised by [Patrick] are 

unavailable given the borrower’s absence from this litigation,” and further, 

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that NASB was not required to join Taylor Bend to proceed with this action

against the Nelsons.4 

Under Brown, “a guaranty that is absolute and unconditional is one 

that requires no condition precedent to its enforcement against the guarantor 

other than mere default by the principal debtor.” 207 So. 3d at 702; see 

Woods-Tucker Leasing Corp. of Ga. v. Kellum, 641 F.2d 210, 215 n.7 (5th Cir. 

1981); see also Kennedy v. Hall, 680 F. App’x 269, 270–71 (5th Cir. 2017) (“It 

has long been the law in Mississippi that with a guaranty of payment, the 

guarantor is immediately liable upon the debtor’s default.”). Put differently, 

when a guaranty is one “of payment . . . the creditor does not have to institute 

any legal proceedings against the debtor before suing the guarantor.” Brown, 

207 So. 3d at 702–03 (internal quotations and citation omitted). Applying 

Brown’s reasoning here, “[f]or purposes of the [G]uaranty, all [NASB] had 

to show was that payment by [Taylor Bend] was due in order to trigger 

[Patrick’s] liability for payment.” Id. NASB did so and could thereafter 

properly sue to enforce Patrick’s obligations under the Guaranty. 

Nonetheless, Patrick contends that he may assert equitable defenses 

available to Taylor Bend. But like the guarantor in Brown, Patrick clearly

waived any right to interpose defenses that belonged to Taylor Bend: The 

Guaranty makes clear that “[Nelson] waive[d] any right to require that an 

action be brought against Borrower or any other person” and that “[n]o such 

_____________________

4 The conversion of NB Taylor Bend, DST to NB Taylor Bend 2, LLC under 

Delaware law is of no moment here. Patrick contends in passing that “[t]his is not [a] 

distinction without a difference, because the LLC and DST are not the same entity,” such 

that the LLC is not a “Borrower” within the Loan Documents. But he fails adequately to 

brief any issue related to the entity conversion, such that his argument is waived. Ramey & 

Schwaller L.L.P. v. Zions Bancorporation NA, 71 F.4th 257, 261 n.3 (5th Cir. 2023). Besides, 

as NASB points out, the conversion was plainly contemplated by the Loan Agreement, and 

Delaware law makes clear that the converted LLC stands in place of the former entity. 

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action which Lender shall take or fail to take in connection with the Loan 

Documents . . . shall limit, impair or release [Nelson’s] obligations 

hereunder . . . .” Cf. Brown, 207 So. 3d at 703–04. Thus, the district court 

did not err in concluding that Patrick could not raise the asserted defenses. 

Rather, Patrick’s Guaranty was one of payment, it was “absolute and 

unconditional,” and he waived his right to bring the defenses he now 

presses.5

 

Given the clarity of the Guaranty, as viewed through the lens of Brown, 

Patrick offers no genuine dispute of material fact that frustrates summary 

judgment for NASB. 

C.

Patrick last argues that the district court erred in its second 

memorandum opinion, awarding NASB damages and post-judgment 

interest, by not applying a $2.6 million credit from Nor-Am’s postforeclosure sale of the Apartments to Kirkland. His argument rests on two 

premises: (1) the court should have included the offset of $2.6 million when 

considering Patrick’s equitable defenses to liability due to NASB’s “bad faith 

and negligent administration,” which depressed the property’s resale value;

and (2) the “subsequent sale constitutes a mitigation of damages that must 

be considered and credited against the deficiency amount” because 

otherwise NASB would receive an “inequitable . . . windfall.”

_____________________

5 Patrick asserts that Morgan v. Trustmark National Bank, 99 So. 3d 263 (Miss. Ct. 

App. 2012), shows that Mississippi law does not preclude a guarantor from asserting 

defenses personal to the guarantor and that the Morgan court addressed, and rejected, the 

guarantor’s defenses on the merits. But Morgan is clearly inapposite. The guarantors there 

raised defenses arising from their signing the guaranty, i.e., they contended that they were 

fraudulently induced to sign it. Morgan, 99 So. 3d at 267. In contrast, Patrick attempts to 

raise defenses the borrower could have interposed to avoid liability under the Loan 

Documents, not to avoid the Guaranty personally.

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Both premises are faulty. As to the equitable defenses, “unlike suits 

where the lender sues the primary borrower, an individual guaranty . . . does 

not require foreclosure or fairness of price. The guarantor is immediately 

liable upon the borrower’s . . . default.” Bosarge v. LWC MS Props. LLC, 158 

So. 3d 1137, 1143 n.5 (Miss. 2015). Patrick offers no support for his 

contention that he, as guarantor, may yet raise equitable defenses as to the 

foreclosure’s sale’s price. 

Moreover, quoting Mississippi Valley Title Ins. Co. v. Horne 

Construction Co., 372 So. 2d 1270, 1272 (Miss. 1979), Patrick contends that 

Mississippi law generally requires that a “mortgagee has endeavored to 

collect [a deficiency judgment] out of the land [beforehand].” In Patrick’s 

view, “there is no functional difference in this case between [Taylor Bend]

and Patrick, in his capacity as guarantor,” such that NASB had an obligation 

to mitigate its damages via the subsequent sale to Kirkland. 

Patrick is incorrect; NASB had no obligation to mitigate its damages 

with respect to the guarantorsto reduce the deficiency judgment. Mississippi 

law permits a creditor to “reduce [its] claim to judgment, foreclose, or 

otherwise enforce the claim . . . by any available judicial procedure.” Miss. 

Code Ann. § 75-9-601(a)(1); see Devine v. Cardinal Health 110, LLC, 350 

So. 3d 1107, 1114 (Miss. Ct. App. 2022) (citing Rea v. O’Bannon, 158 So. 916, 

918 (Miss. 1935)). Though Patrick contends that “[t]he general rule 

applicable for mortgage deficiency judgments also supports the equitable 

offsets claimed by the putative guarantor here,” he provides no Mississippi

case supporting such a contention. And to the extent Patrick urges us to 

extend Mississippi law, we decline to do so. Barfield v. Madison Cnty., Miss., 

212 F.3d 269, 272 (5th Cir. 2000) (admonishing federal courts not to 

“expand state law beyond its presently existing boundaries”); see also 

Meador, 911 F.3d at 264 (5th Cir. 2018) (“If guidance from state cases is 

lacking, it is not for us to adopt innovative theories of recovery under state 

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law.”) (internal quotations and citation omitted). Thus, as correctly held by 

the district court, NASB had no duty to mitigate its damages and provide an 

offset in favor of the Nelsons by virtue of its third-party sale of the 

Apartments to Kirkland. 

III. 

The Guaranty was properly assigned from Prudential to Liberty and 

from Liberty to NASB. NASB could therefore properly bring its claims for 

breach of guaranty and declaratory judgment against the Nelsons to recover 

the loan deficiency. Moreover, under Mississippi law, Patrick may not

interpose equitable defenses that were available only to Taylor Bend to defeat 

his liability under the Guaranty. And, for similar reasons, the deficiency 

judgment awarded to NASB pursuant to the Guaranty need not be reduced 

by the third-party sale of the Apartments to Kirkland. NASB had no duty to 

mitigate its damages under either Mississippi law or the terms of the 

Guaranty. Considering the foregoing, the judgment of the district court is 

AFFIRMED. 

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