Court Opinion

ID: 2656106
Source: CourtListenerOpinion
Date Created: 2014-03-10 19:07:14.008268+00
Date Added: 2024-06-11T12:18:10.634961
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 13-1767

U. S. BANK NATIONAL ASSOCIATION, Trustee, successor to
Wells Fargo Bank, N. A., As Trustee for the registered
holders of CD2007-CD4 Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series CD 2007-CD4,

                Plaintiff - Appellee,

          v.

HOSSEIN K. ZARRABI; MANSOUR K. YAZDANI,

                Defendants - Appellants.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.   T. S. Ellis, III, Senior
District Judge. (1:12-cv-01376-TSE-TRJ)

Submitted:   February 27, 2014              Decided:    March 10, 2014

Before KING and    FLOYD,   Circuit   Judges,   and   HAMILTON,   Senior
Circuit Judge.

Affirmed by unpublished per curiam opinion.

James P. Campbell, CAMPBELL FLANNERY, PC, Leesburg, Virginia,
for Appellants.      Matthew G. Summers, BALLARD SPAHR LLP,
Wilmington, Delaware; Michelle M. McGeogh, BALLARD SPAHR LLP,
Baltimore, Maryland, for Appellees.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

            Hossein       K.   Zarrabi        and       Mansour    K.      Yazdani    (the

“Guarantors”) appeal the district court’s order granting U.S.

Bank’s motion for summary judgment in a proceeding seeking full

payment     from   the     Guarantors     of        a    loan.       On     appeal,    the

Guarantors contend that the district court erred by not invoking

the doctrines of collateral estoppel and judicial estoppel to

bar U.S. Bank’s deficiency claim against them.                            The Guarantors

further argue that the district court erroneously held that the

certificate of satisfaction did not release the Guarantors as a

matter of law.       Finally, the Guarantors argue that the district

court erred in holding that Illinois law did not preclude U.S.

Bank’s action against the Guarantors.                   We affirm.

            We review the district court’s determination regarding

collateral estoppel de novo.            See United States v. Fiel, 35 F.3d
997, 1005 (4th Cir. 1994).             “Collateral estoppel forecloses the

relitigation of issues of fact or law that are identical to

issues    which    have     been   actually         determined       and     necessarily

decided   in    prior     litigation     in    which      the     party    against    whom

issue preclusion is asserted had a full and fair opportunity to

litigate.”        Sedlack v. Braswell Servs. Group, Inc., 134 F.3d
219, 224 (4th Cir. 1998) (brackets and internal quotation marks

omitted).      To apply collateral estoppel, a party must show that

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       (1) the issue or fact is identical to the one
       previously litigated; (2) the issue or fact was
       actually resolved in the prior proceeding; (3) the
       issue or fact was critical and necessary to the
       judgment in the prior proceeding; (4) the judgment in
       the prior proceeding is final and valid; and (5) the
       party to be foreclosed by the prior resolution of the
       issue or fact had a full and fair opportunity to
       litigate the issue or fact in the prior proceeding.

In re Microsoft Corp. Antitrust Litig., 355 F.3d 322, 326 (4th

Cir. 2004).       With these standards in mind, we have reviewed the

parties’ briefs and the record and find no reversible error on

this issue.

               “Judicial estoppel is a principle developed to prevent

a party from taking a position in a judicial proceeding that is

inconsistent with a stance previously taken in court.”                         Zinkand

v.    Brown,    478 F.3d 634,   638    (4th     Cir.   2007).      Federal   law

controls the application of this principle, because “it relates

to protection of the integrity of the federal judicial process.”

Allen v. Zurich Ins. Co., 667 F.2d 1162, 1168 n.4 (4th Cir.

1982). We review a district court’s decision whether to apply

judicial estoppel for abuse of discretion.                      King v. Herbert J.

Thomas Mem’l Hosp., 159 F.3d 192, 198 (4th Cir. 1998).

               “Three    elements      must       be   satisfied   before      judicial

estoppel will be applied.”                Zinkand, 478 F.3d at 638.              First,

the    party     to     be     estopped      must      be   advocating     a   position

inconsistent with one taken in prior litigation.                         Id.   “Second,

the prior inconsistent position must have been accepted by the

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court.”    Id.   Finally, the party against whom judicial estoppel

is asserted must have intentionally misled the court in order to

gain unfair advantage.         Id.     Applying these standards, we again

have reviewed the parties’ briefs and the record and find no

reversible error.

           Under     Virginia    law,      a    certificate        of    satisfaction

operates   “as   a   release    of   the       encumbrance    as    to        which    such

payment or satisfaction is entered and, if the encumbrance be by

deed of trust, as a reconveyance of the legal title as fully and

effectually as if such certificate of satisfaction were a formal

deed of release duly executed and recorded.”                        Va. Code Ann.

§ 55-66.3(C)     (2007).        “The     purpose        of    a    certificate          of

satisfaction under Virginia law is to release a deed of trust

from realty in the land records.”                   In re Green, 175 B.R. 609,

611 (Bankr. E.D. Va. 1994).             Paragraph 2.7 of the guaranties

specifically provides that the release of any property connected

to the debt is not a release of the Guarantors’ obligations

under   the    guaranty    contracts.           Accordingly,        we        affirm    the

district court’s conclusion that the certificate of satisfaction

does not extinguish the Guarantors’ liability.

           The     guaranties    contain        a    choice   of        law    provision

requiring that they be interpreted under Illinois law.                           In that

state, a guaranty is a contract subject to the usual rules of

contract interpretation.        See McHenry Sav. Bank v. Autoworks of

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Wauconda,   Inc.,    924 N.E.2d 1197,   1205     (Ill.     App.     Ct. 2010).

Contracts should be interpreted to give effect to the parties’

intent in entering the contract.              Id.      Under Illinois law, a

guaranty may expressly provide for the guarantor’s continuing

liability even after the release of the primary obligor.                           See

815 Ill. Comp. Stat. 115/6 (West 2013).                    Article Two of the

guaranties at issue contains such a provision, noting that the

Guarantor’s obligations would not be released, diminished, or

otherwise adversely affected by any modifications, adjustments,

compromises, or releases between the Borrower and the Lender.

Moreover, the guaranties state that “it is the unambiguous and

unequivocal    intention       of   Guarantor       that   Guarantor       shall   be

obligated to pay the Guaranteed Obligations . . . which [] shall

be deemed satisfied only upon the full and final payment and

satisfaction    of     the    Guaranteed    Obligations.”           Moreover,      the

Stipulated Order of September 15, 2011, specifically reserved

U.S. Bank’s right to pursue its claims against other parties,

which would include the Guarantors.             Accordingly, we affirm the

district court’s judgment.

            We dispense with oral argument because the facts and

legal    contentions    are    adequately     presented        in   the    materials

before   the   court    and    argument     would    not   aid      the   decisional

process.

                                                                            AFFIRMED

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