Opinion ID: 2282164
Heading Depth: 1
Heading Rank: 4

Heading: BNY's Cross-Claim

Text: The second issue raised in this appeal is BNY's cross-claim. Pellaton argued in the Superior Court that the terms of the Guaranty of Debt Service and the Guaranty of Payment were ambiguous and, thus, parol evidence was permissible to interpret the meaning of those documents. The Superior Court agreed with Pellaton. The Superior Court found that the Guaranty of Debt Service and the Guaranty of Payment were ambiguous with respect to the aggregate amount of Pellaton's personal liability. Therefore, the Superior Court admitted parol evidence by Pellaton and his Delaware attorney concerning the intended purpose of those documents. Since both guaranties had been prepared by BNY's legal counsel, the Superior Court decided that any ambiguity in those documents had to be resolved in favor of Pellaton. The Superior Court held that Pellaton's aggregate personal liability, as provided for in the Guaranty of Debt Service and the Guaranty of Payment, was limited to $1,933,000.00, one-third of the amount of a related mortgage. In its cross-claim, BNY challenges that decision. BNY argues that the Superior Court should not have admitted parol evidence by Pellaton and his Delaware attorney to construe the two personal guaranties because the provisions of those documents are unambiguous. BNY submits that pursuant to the Guaranty of Debt Service, Pellaton guaranteed the timely payment of the entire monthly interest which was due on the loan, and, in addition, pursuant to the Guaranty of Payment, guaranteed the repayment of $1,933,000.00, approximately one-third of the principal amount of the loan. BNY asserts that the terms of each guaranty expressly provide that Pellaton's aggregate personal liability under both guaranties may exceed $1,933,000.00. The proper interpretation of language in a contract, while analytically a question of fact, is treated as a question of law both in the trial court and on appeal. Klair v. Reese, Del.Supr., 531 A.2d 219, 222 (1987) (citations omitted). Therefore, this Court must make its own interpretation of the contractual language. Id. (citations omitted). When there is uncertainty in the meaning and application of the terms of the contract, this Court, and the trial court, will consider testimony pertaining to antecedent agreements, communications and other factors which bear on the proper interpretation of the contract. Klair v. Reese, 531 A.2d at 223. However, if the instrument is clear and unambiguous on its face, neither this Court nor the trial court may consider parol evidence to interpret it or search for the parties' intent[ions].... Hibbert v. Hollywood Park, Inc., Del. Supr., 457 A.2d 339, 343 (1983). See Cleveland Trust Co. v. Wilmington Trust Co., Del.Supr., 258 A.2d 58, 65 (1969). The record reflects that the loan documents required the borrower, UMA, to pay interest only on a monthly basis for a period of five years, i.e., no amortization of principal. The Guaranty of Debt Service addressed Pellaton's personal liability in the event that the borrower defaulted on its obligation to make timely monthly payments of interest to BNY. The Guaranty of Payment addressed Pellaton's personal liability in the event that the borrower defaulted on its ultimate obligation to make a timely repayment of the principal amount owed to BNY. The Guaranty of Debt Service, by which the entire monthly payments of interest to BNY were guaranteed, specifically provides that any personal liability that Pellaton may have under it is in addition to any liability he may have under the Guaranty of Payment: The obligation of Guarantor hereunder shall be in addition to, and not in limitation of, Guarantors' obligation under a certain Guaranty of Payment ... of even date herewith from Guarantor to Bank. The Guaranty of Payment, by which the payment of all other sums ( inter alia principal) that may become due to BNY were guaranteed, does provide that its liability is limited to $1,933,000.00. However, paragraph 2(b) of the Guaranty of Payment specifically provides that this limitation on liability is independent of any liability Pellaton may have under the separate Guaranty of Debt Service. Paragraph 2(b) of the Guaranty of Payment states: (b) Notwithstanding Paragraph 2(a) ..., Guarantor's liability hereunder is limited to $1,933,000.00; provided, however, that the limitations set forth in this subparagraph (b) shall in no way limit, and shall be in addition to, any liability of any Guarantor under a certain Guaranty of Debt Service ... of even date herewith, from Guarantor to Bank. The record reflects that the provisions of both the Guaranty of Debt Service and the Guaranty of Payment clearly provide for cumulative liability. Therefore, the Superior Court erred, as a matter of law, in admitting parol evidence to vary or contradict the unambiguous provisions of the Guaranty of Payment and the Guaranty of Debt Service. See Klair v. Reese, Del. Supr., 531 A.2d 219 (1987); Hibbert v. Hollywood Park, Inc., Del.Supr., 457 A.2d 339 (1983); Cleveland Trust Co. v. Wilmington Trust Co., Del.Supr., 258 A.2d 58 (1969). Consequently, the Superior Court's holding that Pellaton's aggregate liability on both guaranties was limited to $1,933,000.00, one-third of the amount of the related mortgage, must be reversed.