Court Opinion

ID: 9784548
Source: CourtListenerOpinion
Date Created: 2023-08-30 20:48:15.991641+00
Date Added: 2024-06-11T07:35:56.148581
License: Public Domain

ROBINSON, Judge (dissenting). {33} Rarely have I seen a fact pattern that demands a dissent as much as this one. {34} I am concerned that the landlord, Southwest Malls, intentionally chose not to notify or even verbally inform the Ritters that their sublessee, Aspen, had defaulted on the lease payments. {35} What makes it so improper is that Southwest Malls waited twenty months — one month at a time and $10,000 at a time— before notifying the Ritters of the default. And then, how did Southwest Malls finally notify them? It sued them for $200,000 in unpaid rent and other charges. {36} What is even more disturbing is that Southwest Malls never took any action to evict Aspen or terminate the lease. Southwest Malls allowed Aspen to keep the tavern open, making money, without paying the rent. {37} What is downright egregious is that, during the time beginning August 2000, when Aspen stopped paying rent, a division of Southwest Malls was in contact with the Ritters over a separate dispute in which it claimed that the Ritters owed it money prior to the Ritters’ assignment of the lease to the Muellers, who later assigned it to Aspen with Southwest Malls’ approval. What earthly reason or possible justification could Southwest Malls have had not to inform the Ritters, even by telephone, let alone in writing, that they already owed money for Aspen’s default. {38} Citing Richardson, 112 N.M. at 74, 811 P.2d at 572, the majority views the Ritters’ guaranty as “a single obligation, and not an open-ended series of obligations, and because the amount guaranteed was reasonably ascertainable, we conclude that this was a restricted guaranty.” Majority Opinion ¶ 18. {39} I do not agree. I see the Ritters’ obligation as one that continues on a monthly basis, one month at a time. If the primary obligor, Aspen, pays its rent in a given month, then the Ritters do not need to pay any rent. Then we go on to the next month. If Aspen pays rent during that month, the Ritters have no obligation to pay anything. The same continues to be true each month, one month at a time. Their obligation to pay a month’s rent as guarantor only kicks in after Aspen has failed to pay that month’s rent. The rent becomes due for the Ritters at the end of a month on which Aspen has defaulted, not at the end of the lease term, twenty months later. But, how can they fulfill their guaranty unless Southwest Malls notifies them of Aspen’s default? {40} The majority acknowledges, citing Morris, 79 B.R. at 785-86, that “a creditor may breach a duty of good faith by failing to inform a guarantor of facts that materially increase the guarantor’s risks.” Majority Opinion ¶28. The majority also states “we cannot see how Southwest Malls’ inaction materially increased the risks contemplated in the guaranty.” Id I can. {41} Any reasonably prudent man who signs a guaranty on a lease where monthly payments are required contemplates that he will be called upon to make a monthly payment at the time the primary obligor fails to do so — not six months later, not twenty months later, not $200,000 later. {42} After the first month of Aspen’s nonpayment, the Ritters could have taken reasonable actions to avoid getting stuck with all the remaining monthly payments under the lease in several different ways. Had Southwest Malls only informed them of Aspen’s default, the Ritters could have tried to find a new tavern operator to take over the business and the lease, and could have taken steps to force Aspen out. The Ritters could even have gone back in and operated the tavern themselves, having good reason to do so if they were going to get stuck with the remaining twenty lease payments. To say that the Ritters’ risk was not increased is incorrect. It was increased as each month went by that Southwest Malls intentionally failed to notify them of Aspen’s continuing default in paying the rent. {43} At any time during the long period of Aspen’s default, the Ritters could have walked through the Mall and would have had no way of knowing that Aspen had stopped paying rent because Southwest Malls let Aspen continue operating the tavern without evicting them. {44} Since Southwest Malls did not evict Aspen, the Ritters were lulled into a false belief that everything was okay, thanks to Southwest Malls’ inaction. I have no doubt that the Ritters suffered prejudice by the action or inaction of Southwest Malls. {45} Does Southwest Malls’ actions or inaction amount to deceit or fraud? Perhaps. Does it amount to bad faith and unfair dealing? It certainly does. {46} This case reminds me of a puzzle that school children put together. One may think that all the little pieces are being put together in all the correct places. The problem is that when you look at the finished puzzle, you see a picture that is all wrong. {47} I would affirm the court’s denial of Southwest Malls’ motion for summary judgment. I, therefore, respectfully dissent.