Court Opinion

ID: 4774
Source: CourtListenerOpinion
Date Created: 2010-04-25 04:59:05+00
Date Added: 2024-06-11T16:41:40.658763
License: Public Domain

United States Court of Appeals,

                             Fifth Circuit.

                              No. 91–1501.

 RESOLUTION TRUST CORPORATION, as receiver for First Savings and
Loan Association of Waco and First Savings and Loan Association of
Temple, and as conservator of First Savings and Loan, F.A., Temple,
Texas, Plaintiffs–Appellees,

                                    v.

          NORTHPARK JOINT VENTURE, et al., Defendants,

                                   and

 Steven S. Schiff, Charles G. Dannis, Stephen T. Crosson, Barry
Howard, Robert L. Schiff, Charles H. Perry, Herbert G. Schiff and
Telstar Partnership, Defendants–Appellants.

                             April 24, 1992.

Appeal from the United States District Court for the Northern
District of Texas.

Before KING, JOHNSON and DAVIS, Circuit Judges.

     JOHNSON, Circuit Judge:

     This action originated in state court as a suit to recover the

balance of a debt.      The state court granted partial summary

judgment against the defendants, concluding that the defendants

were responsible for the unsatisfied indebtedness.         After the case

was removed to federal district court, the federal court declined

to reconsider the state court ruling and entered a judgment against

the defendants.     Unable    to   conclude   that   the   district   court

committed reversible error, this Court affirms.

                  I. FACTS AND PROCEDURAL HISTORY

     In April 1985 Northpark Joint Venture ("Northpark"), a joint

venture formed under Texas law, entered into a loan agreement with
Texas State Mortgages, Inc. ("TSM").        TSM advanced Northpark $9.15

million, which Northpark in a promissory note agreed to repay with

interest.      To secure repayment of the loan, Northpark executed a

deed of trust granting TSM a lien upon certain real property

located in Mississippi.        In addition, the individuals who formed

Northpark—Steven S. Schiff, Charles G. Dannis, Stephen T. Crosson,

Barry Howard, Robert L. Schiff, Charles H. Perry, Herbert G. Schiff

and   Telstar      Partnership—executed    absolute     and   unconditional

personal guaranties to repay up to $3,202,500 of the $9.15 million

indebtedness.1

      Two years later, Northpark defaulted on its obligation under

the promissory note. Unable to collect repayment, TSM assigned its

rights    in    the   loan   transaction   to   First   Savings   and   Loan

Association of Waco ("First Waco") and First Savings and Loan

Association of Temple ("First Temple").         Pursuant to the terms of

the loan agreement, First Waco and First Temple made a formal

demand that Northpark and its individual guarantors cure the

default.       The default remained uncured, and First Waco and First

Temple sold the Mississippi property in a public foreclosure sale

for $3,637,500.       The proceeds of the foreclosure sale were applied

to the unpaid principal, leaving an unsatisfied indebtedness of

$3,253,464.96 in principal and $1,200,683.11 in accrued interest.

      1
      Two separate guaranties are in issue in this case. The
first guaranty was signed by defendants Herbert G. Schiff, Robert
L. Schiff, Steven S. Schiff, Charles H. Perry, Charles G. Dannis
and Stephen T. Crosson, while the second guaranty was signed by
Robert B. Howard. The separate guaranties are virtually
identical in their terms.
       Following foreclosure, First Waco and First Temple filed suit

in    Texas     state   court   against   Northpark   and   its   individual

guarantors to recover the amount of the unsatisfied indebtedness.

The    individual       guarantors   filed   a   counterclaim     seeking   a

declaratory judgment that they were not liable under the note or

their guaranties.          Both sides then filed motions for summary

judgment.       In September 1989 the court granted partial summary

judgment against the individual guarantors, concluding that the

guarantors must bear personal liability for $32,202,500 of the

unsatisfied indebtedness.2

           While the action was still pending in state court, Northpark

declared bankruptcy and was dismissed from the lawsuit.3 Moreover,

First Waco and First Temple became insolvent. The Resolution Trust

Corporation ("RTC") was appointed to serve as the receiver of both

First Waco and First Temple.4        In August 1990 the RTC intervened in

       2
      As early as January 3, 1989, the state court had decided
that it would grant partial summary judgment against the
individual guarantors, but it reversed itself on reconsideration.
Only after a second reconsideration did the state court finally
conclude that the guarantors were liable for $3,202,500, the
maximum amount of the guaranties.
       3
      A guarantor may waive his right to have the maker of the
underlying note made a party defendant. Yandell v. Tarrant State
Bank, 538 S.W.2d 684, 688 (Tex.Civ.App.—Fort Worth 1976, writ
ref'd n.r.e.).
       4
      In July 1989 the Federal Home Loan Bank Board declared
First Waco insolvent and appointed the Federal Savings and Loan
Insurance Corporation to serve as receiver. The Bank Board then
organized First Savings and Loan, F.A., Waco, Texas ("First F.A.
Waco") and appointed the FSLIC to serve as conservator of the new
savings and loan. Under a purchase and assumption agreement, the
Bank Board transferred to First F.A. Waco almost all of First
Waco's assets, including the promissory note and the personal
guaranties. The Resolution Trust Corporation subsequently
the state court action and removed the case to federal court.                  The

individual defendants filed a motion for reconsideration of the

partial summary judgment.           The federal district court denied the

motion for reconsideration, ruling that the guarantors indeed were

liable    for    $3,202,500    of     the   unsatisfied   indebtedness,    plus

interest and "reasonable" attorneys' fees.

     On May 16, 1991, the individual defendants filed a notice of

appeal.    Four days later, the federal district court entered a

"Final Judgment" denying all relief that the defendants had sought

in their counterclaim and granting the RTC a specific award of

$93,463.60 in attorneys' fees.

                                II. DISCUSSION

         The    defendants    argue    that   the   district   court   erred    in

declining to reconsider the partial summary judgment that the state

court had entered.      After removal of an action to federal district

court, "[a]ll injunctions, orders, and other proceedings had in

such action prior to its removal shall remain in full force and

effect until dissolved or modified by the district court."                      28

U.S.C. § 1450 (1988).          A prior state court order in essence is

federalized when the action is removed to federal court, although

replaced the FSLIC as receiver of First Waco and as conservator
of First F.A. Waco. Months later, the Office of Thrift
Supervision declared First Temple insolvent and appointed the RTC
receiver. Under another purchase and assumption agreement, the
Office of Thrift Supervision designated the RTC conservator of a
new institution, First Savings and Loan, F.A., Temple, Texas,
which received almost all of the assets once belonging to the
defunct First Temple.
the order "remains subject to reconsideration just as it had been

prior to removal."      Nissho–Iwai American Corp. v. Kline, 845 F.2d
1300, 1303 (5th Cir.1988).

        Federal procedure governs the enforcement of a prior state

court order in a case removed to federal court.           Id.     Thus, where

the prior state court order is a summary judgment, the federal

court   must   ensure    that    the   order    is   consistent     with    the

requirements of Rule 56(c) of the Federal Rules of Civil Procedure.

See   Fed.R.Civ.P.   56(c)      (permitting    summary   judgment    if    "the

pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is

no genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.").            If the federal

court declines to reconsider the state court summary judgment, then

the federal court certifies that the order is indeed consistent

with Rule 56(c).     The standard of review is the same as if the

federal court itself had entered the order:          this Court will review

the record de novo, resolving all reasonable doubts and drawing all

reasonable inferences in favor of the party opposing the summary

judgment.   FDIC v. Hamilton, 939 F.2d 1225, 1227 (5th Cir.1991).

      Before we reach the merits of the summary judgment in this

case, we must consider two preliminary questions: (1) whether this

Court has acquired the requisite appellate jurisdiction and (2)

whether Mississippi or Texas law governs the relative rights of the

parties.
A. Appellate Jurisdiction

       A timely notice of appeal is a mandatory prerequisite to the

exercise of appellate jurisdiction. United States v. Robinson, 361
U.S. 220, 224, 80 S. Ct. 282, 285, 4 L. Ed. 2d 259 (1960).                               Rule

4(a)(1) of the Federal Rules of Appellate Procedure requires an

appellant to file its notice of appeal "within 30 days after the

date    of    entry       of   the     judgment     or        order     appealed    from."

Fed.R.App.P. 4(a)(1) (emphasis added). The defendants in this case

filed their notice of appeal four days before the district court

entered its final judgment.                 Consequently, under Rule 4(a)(1),

their notice of appeal was premature.

       A premature notice of appeal is not necessarily ineffective.

In   some circumstances,             Rule   4(a)(2)      of    the     Federal    Rules   of

Appellate Procedure will permit an appellate court to exercise its

jurisdiction despite a premature notice.                        Rule 4(a)(2) provides

that a notice of appeal "filed after the announcement of a decision

or order but before the entry of the judgment or order shall be

treated      as   filed    after     such   entry     and      on     the   day   thereof."

Fed.R.App.P. 4(a)(2).           This rule recognizes that, unlike a tardy

notice of appeal, certain premature notices do not prejudice

opposing parties and therefore "should not be allowed to extinguish

an otherwise proper appeal."                FirsTier Mortgage Co. v. Investors

Mortgage Ins. Co., ––– U.S. ––––, 111 S. Ct. 648, 651, 112 L. Ed. 2d
743 (1991).

       In FirsTier Mortgage Co. v. Investors Mortgage Insurance Co.,
the United States Supreme Court attempted to determine the extent

to which Rule 4(a)(2) salvages a premature notice of appeal.                         The

plaintiff in FirsTier Mortgage filed a suit alleging that the

defendant breached several insurance contracts. The district court

granted summary judgment in favor of the defendant, but declined to

impose    final     judgment     until    the    defendant      submitted    proposed

findings of fact and conclusions of law.               Before the district court

could issue its final judgment, the plaintiff filed a notice of

appeal from       the   summary    judgment       ruling.       The   Supreme    Court

concluded that the notice of appeal, although premature, was

effective to invoke the jurisdiction of the federal appellate

courts. 111 S. Ct. at 653.            According to the Court, a premature

notice of appeal relates forward to final judgment and serves as an

effective notice from the final judgment whenever it follows "a

decision that would be appealable if immediately followed by the

entry of judgment."        Id.    (emphasis in original).

     Like the notice of appeal in FirsTier Mortgage, the notice of

appeal in the instant case is an effective notice.                    The defendants

in this case appeal the district court order refusing to reconsider

the summary judgment in favor of the plaintiffs.                   At the time that

the state court first entered the summary judgment, this decision

was a     partial    judgment     that     determined     the    liability      of   the

individual    guarantors,        but     did    not   purport    to   determine      the

liability of defendant Northpark.               Thus, at that time, the summary

judgment would not have been appealable, even if the state court

had entered judgment.             However, by the time that the federal
district court entertained the motion to reconsider the summary

judgment, Northpark was bankrupt and had been dismissed from the

action.   Since Northpark was no longer a party, the order refusing

to reconsider the summary judgment adjudicated the rights of all

the remaining parties to the action.    This order would have been

appealable if the district court had immediately entered judgment.

See Hardy v. Gulf Oil Corp., 949 F.2d 826, 829 n. 6 (5th Cir.1992)

(district court can enter judgment if it "has effectively disposed

of all the claims before it");   see also Jetco Electronic Indus.,

Inc. v. Gardiner, 473 F.2d 1228, 1231 (5th Cir.1973). Accordingly,

although filed before final judgment, the notice of appeal in this

case serves as an effective notice from the final judgment.5   This

Court can exercise its appellate jurisdiction.

B. Choice of Law

     In refusing to reconsider the summary judgment entered in

state court, the federal district court reasoned that Texas law

required the defendants to bear responsibility for the amount of

their guaranties.   The defendants argue that the district court

should have applied Mississippi law, not Texas law.        The RTC

concedes that if Mississippi law governs the substantive issues in

     5
      Prior to the decision in FirsTier Mortgage, the Fifth
Circuit had reasoned that, as long as the parties in a case had
not filed postjudgment or posttrial motions, a notice of appeal
was effective even if filed before the district court announced a
final judgment. See Alcom Electronic Exchange, Inc. v. Burgess,
849 F.2d 964, 967 (5th Cir.1988); Alcorn County v. United States
Interstate Supplies, 731 F.2d 1160, 1165–66 (5th Cir.1984).
Because we conclude that the facts in the instant case fall
within the exception described in FirsTier Mortgage, we do not
address whether the rule in Alcom Electronic Exchange and Alcorn
County survives FirsTier Mortgage.
this lawsuit, then summary judgment would have been inappropriate.

See Lake Hillsdale Estates, Inc. v. Galloway, 473 So. 2d 461, 466

(Miss.1985);      Mississippi Valley Title Ins. Co. v. Horne Constr.

Co., 372 So. 2d 1270, 1272 (Miss.1979).             Nonetheless, we conclude

that the district court did not err in applying Texas law.

          A federal court is required to follow the choice of law rules

of the state in which it sits.            Klaxon v. Stentor Electric Mfg.

Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477 (1941).

In this case, therefore, the federal district court must look to

the Texas choice of law rules.           Under the Texas rules, in those

contract cases in which the parties have agreed to an enforceable

choice of law clause, the law of the chosen state must be applied.

DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 678 (Tex.1990).6                 But

in   those    cases   in   which   the   parties   have   not   agreed   to   an

enforceable choice of law clause, "the law of the state with the

most significant relationship to the particular substantive issue

will be applied."      Duncan v. Cessna Aircraft Co., 665 S.W.2d 414,

421 (Tex.1984).

      6
      Texas has adopted section 187 of the Restatement (Second)
of Conflict of Laws. DeSantis, 793 S.W.2d at 678. Section 187
states the appropriate choice of law rule governing contract
cases involving a contractual choice of law clause. In most such
cases, the law of the state chosen in the clause should be
applied. However, under subsection 2(b) of section 187, the law
of the state chosen in a contractual choice of law clause should
not be applied if "application of the law of the chosen state
would be contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state ... and which
... would be the state of the applicable law in the absence of an
effective choice of law by the parties." Restatement (Second) of
Conflict of Laws § 187(2)(b) (1971). We do not address this
exception here.
         Both the promissory note and the deed of trust contain

separate choice of law clauses.7         The promissory note specifies

that the laws of the state of Texas shall govern its terms.       On the

other hand, the deed of trust specifies that Mississippi law shall

govern its terms, and it further provides:

     [If the Grantor defaults on its obligations, the] Trustee ...
     shall ... sell all or any part of the Property after giving
     notice of the time, place and terms of sale as required by
     Section 89–1–55 of the Mississippi Code of 1972.... Grantor
     shall remain liable for any deficiency on the Obligations.

Deed of Trust ¶ 9, at 3 (emphasis added).       The defendants contend

that the choice of law clause in the deed of trust is enforceable.

They argue that the plaintiffs brought an action for a deficiency

judgment and that, because the deed of trust creates the right to

a deficiency judgment, the choice of law clause in the deed of

trust should govern.

     The flaw in this argument is the erroneous assumption that the

deed of trust creates the right to a deficiency judgment.             "An

action against guarantors of a note for a deficiency following

foreclosure on real property is an action involving enforcement of

the underlying debt."      Resource Savings Ass'n v. Neary, 782 S.W.2d
897, 902 (Tex.App.—Dallas 1989, writ denied).         It does not arise

out of the real estate foreclosure.       Id.   See also First Commerce

Realty    Investors   v.    K–F   Land   Co.,   617 S.W.2d 806,   809

(Tex.Civ.App.—Houston [14th Dist.] 1981, writ ref'd n.r.e.). Thus,

     7
      Unlike the other documents, the guaranties do not contain a
choice of law clause.
the promissory note and the guaranties, not the deed of trust,

create the right to a deficiency judgment against the guarantors of

a note.    The deficiency judgment clause in the deed of trust has no

effect in this case.8

     Because the deed of trust does not provide the source for the

action against the defendants, the choice of law clause in the deed

of trust is not enforceable:            the parties cannot be said to have

agreed that Mississippi law would govern a deficiency judgment

action against the guarantors.            If anything, it appears that the

parties agreed to the application of Texas law.                    The promissory

note, which in part creates the right to a deficiency judgment

against the defendant guarantors, states that Texas law governs the

obligations arising under the note and loan agreement. Texas State

Mortgages, the predecessor in interest of plaintiff RTC, was a

direct    party   to    this    promissory   note      and    presumably     helped

negotiate the choice of law clause.               The individual defendants

agreed    to    guaranty      the   enforcement   of    the    note   and,    as    a

consequence, essentially ratified the choice of law clause.                       See

First Commerce Realty Investors, 617 S.W.2d at 809.

         But even if the parties did not agree to the application of

Texas    law,   the    same    result   ensues.        In    the   absence   of    an

     8
      In determining whether the choice of law clause in the deed
of trust is "enforceable," this Court must look to Texas law
because Texas supplies the applicable choice of law rules.
DeSantis, 793 S.W.2d at 678. Texas cases therefore determine
whether a deficiency action against the guarantors of a note
arises out of the deed of trust.
enforceable choice of law clause, the law of the state that has

"the most significant relationship to the transaction and the

parties" must be applied.   See DeSantis, 793 S.W.2d at 678 (quoting

Restatement (Second) of Conflict of Laws § 188 (1971)).9   The state

that has the most significant relationship to the transaction and

the parties in this case is Texas.       First, Texas has greater

     9
      Section 188 of the Restatement, which the Texas Supreme
Court adopted in DeSantis v. Wackenhut Corp., 793 S.W.2d 670,
678–79 (Tex.1990), states the choice of law rule governing
contract cases that do not involve an enforceable choice of law
clause. It provides:

     (1) The rights and duties of the parties with respect to an
          issue in contract are determined by the local law of
          the state which, with respect to that issue, has the
          most significant relationship to the transaction and
          the parties under the principles stated in § 6.

     (2) In the absence of an effective choice of law by the
          parties (see § 187), the contacts to be taken into
          account in applying the principles of § 6 to determine
          the law applicable to an issue include:

               (a) the place of contracting,

               (b) the place of negotiation of the contract,

               (c) the place of performance,

               (d) the location of the subject matter of the
               contract, and

               (e) the domicil, residence, nationality, place of
               incorporation and place of business of the
               parties.

          These contacts are to be evaluated according to their
          relative importance with respect to the particular
          issue.

     (3) If the place of negotiating the contract and the place
          of performance are in the same state, the local law of
          this state will usually be applied, except as otherwise
          provided in §§ 189–199 and 203.

     Restatement (Second) of Conflict of Laws § 188 (1971).
contacts with the transaction and the parties:       (1) the parties

negotiated and executed the note and guaranties in Texas;        (2)

First Waco and First Temple are Texas residents;      (3) all of the

defendants, except one, were Texas residents or domiciliaries at

the time that the note and guaranties were executed;     and (4) the

note and guaranties, by their express terms, are wholly performable

in Texas.     Under the Texas choice of law rules, these contacts

alone can be conclusive in determining the appropriate state law.

See Cook v. Frazier, 765 S.W.2d 546, 549 (Tex.App.—Fort Worth 1989,

no writ) (applying Texas law because Texas residents negotiated and

executed the contracts in question and made all contract payments

in Texas).

     Moreover, Texas has a greater interest in the application of

its law.    At stake here is whether Texas residents are liable under

the personal guaranties they executed to a Texas corporation.

Texas has a direct interest in ensuring that Texas debts are

handled properly and that Texas debtors and creditors are treated

fairly. By contrast, Mississippi has little interest in this case.

In enacting their guaranty laws, Mississippi legislators and judges

intended to protect Mississippi citizens.     There is no reason why

Mississippi would have an interest in the application of its laws

to resolve the claims of foreign creditors against foreign debtors.

Cf. Duncan, 665 S.W.2d at 422.     Thus, the relevant interests, as

well as the relevant contacts, favor the application of Texas law.

     We conclude that, under either the choice of law clause in the
promissory note or the most significant relationship test, Texas

law governs the substantive issues in this case.         The district

court did not err in determining that the choice of law clause in

the deed of trust is unenforceable.

C. The Merits of the Summary Judgment

       The principal issue in this case is whether the defendants

must bear responsibility for the unsatisfied indebtedness.           The

guaranties state that the defendants must pay the "indebtedness or

other liability ... which Northpark Joint Venture ... may now or at

any   time   hereafter   owe"    its   creditors.   According   to   the

defendants, this provision in the guaranties limits their liability

to the amount that Northpark would be obligated to pay First Waco

and First Temple.   Under the terms of the promissory note and loan

agreement, Northpark's debt is non-recourse, and Northpark cannot

be held liable for any unsatisfied indebtedness remaining after

foreclosure of the property in the deed of trust.      The defendants

argue that, because Northpark is not liable for the amount of debt

in the note, they also cannot be held liable.

       The Texas rules for interpreting the breadth of a guaranty

agreement are well established. In construing a guaranty contract,

the primary concern of the reviewing court is to ascertain the

intent of the parties.          Coker v. Coker, 650 S.W.2d 391, 393

(Tex.1983).    If the guaranty is ambiguous, then the court must

apply the "construction which is most favorable to the guarantor."

Id. at 394 n. 1.    See also Clark v. Walker–Kurth Lumber Co., 689
S.W.2d 275, 278 (Tex.App.—Houston [1st Dist.] 1985, writ ref'd

n.r.e.).    But if the guaranty "can be given a certain or definite

meaning or legal interpretation, then it is not ambiguous and the

court will construe the contract as a matter of law."     Coker, 650
S.W.2d at 393.

     On motion for reconsideration of the state court summary

judgment, the federal district court ruled that the guaranties

which the defendants had executed were not ambiguous.     The court

reasoned that "[d]espite the fact that Northpark is not liable for

the indebtedness underlying the Note, the indebtedness continues to

exist."    District Court Opinion at 5.   Noting that the guaranties

required the defendants to pay the "indebtedness," the district

court concluded that the defendants must pay $3,202,500 of the

remaining balance of the debt,10 and accordingly, it declined to

reconsider the state court summary judgment.

     Like the district court, we are persuaded that the guaranties

in this case are not ambiguous.   The word "indebtedness" is a legal

term of art describing "[t]he state of being in debt, without

regard to the ability or inability of the party to pay the same."

Black's Law Dictionary 691 (6th ed. 1990) (emphasis added).      The

fact that a debt is non-recourse does not change the fact that the

debtor is "in debt" to a creditor.   Even though Northpark cannot be

     10
      The guaranties limit the defendants' liability to a
maximum of $3,202,500. All of the parties agree that this amount
is the most that the RTC can recover under the guaranties. The
defendants contend, however, that the RTC is not entitled to
recover any sum.
held liable for the amount of debt in its promissory note, it still

incurred an "indebtedness" when it signed the note.    The amount of

the indebtedness is the total sum reflected in the note, plus

interest and other costs.   Since the defendants guarantied to pay

"any and all indebtedness" which Northpark owed its creditors under

the note, the defendants should be required to satisfy the debt up

to the express limit of their guaranties.11   Any other construction

of the guaranties would elevate form over substance.    Cf. FDIC v.

University Anclote, Inc., 764 F.2d 804, 807 (11th Cir.1985).12

     11
      In Western Bank–Downtown v. Carline, 757 S.W.2d 111
(Tex.App.—Houston [1st Dist.] 1988, writ denied), a Texas court
of appeals addressed a situation similar to the situation in the
instant case. The principal in Carline, Tex–La Transportation,
Inc., executed a $1,000,000 promissory note to First Western
Bank. The guarantors agreed to pay "any and all indebtedness"
which Tex–La "may now or may at any time hereafter owe" the Bank.
Id. at 114. Tex–La subsequently declared bankruptcy, and the
Bank sought to collect from the guarantors the unpaid principal,
post-petition interest and attorneys' fees. The guarantors did
not dispute that they were liable for the unpaid principal. They
argued, however, that they were not liable for the interest and
attorneys' fees. The court of appeals agreed. Noting that the
Federal Bankruptcy Act extinguished Tex–La's obligation to pay
any post-petition interest and attorneys' fees, id. at 113 & n.
6, the court concluded that the guarantors also could not be held
liable for the interest and fees. Id. at 114.

          While the facts in Carline are similar to those here,
     Carline is distinguishable. In Carline, the debt was
     extinguished; thus, there was no remaining "indebtedness"
     for which the guarantors would have been liable. In the
     instant case, though, the debt continues to exist, even
     though it is non-recourse. The principal may not be liable
     for the unsatisfied "indebtedness," but there is a remaining
     "indebtedness" for which the guarantors can be held liable.
     12
      The facts in FDIC v. University Anclote, Inc. are similar
to the facts in the instant case. University Anclote executed a
non-recourse promissory note in favor of Metropolitan Bank and
Trust Company. James C. Petersen executed a guaranty in which he
agreed to pay "all indebtedness and liabilities" which University
Anclote owed Metropolitan Bank. After University Anclote
defaulted, the FDIC, as successor of the defunct Metropolitan
Bank, sought recovery from Petersen on his guaranty. Petersen
      We recognize that, as a general rule, the liability of a

guarantor is equal to that of its principal.         Technical Consultant

Serv., Inc. v. Lakewood Pipe of Texas, Inc., 861 F.2d 1357, 1363

(5th Cir.1988) (interpreting Texas law).          But we also recognize

that there is an exception to the general rule:           if the guarantor

agrees, a guaranty contract can impose greater liability upon the

guarantor than the note imposes upon the principal.            See Western

Bank–Downtown      v.    Carline,     757 S.W.2d 111,   114     n.   7

(Tex.App.—Houston [1st Dist.] 1988, writ denied); Simpson v. MBank

Dallas, N.A., 724 S.W.2d 102, 110 (Tex.App.—Dallas 1987, writ ref'd

n.r.e.).     By agreeing to pay the "indebtedness," the defendants

agreed to accept greater liability for the debt.

     The defendants complain that they did not intend to "obligate

themselves to pay the non-recourse portion" of the debt.             However,

when the guaranties are examined in light of the underlying note,

it appears clear that the defendants indeed intended to accept

greater liability for the debt.             The note provides that the

guarantors    of   the   debt   are   excluded   from    its   non-recourse

protection:

     Notwithstanding the promise to pay contained herein and
     notwithstanding any of the other provisions of this Note or of
     any other instrument evidencing, securing the payment of or

argued that he could not be held liable because the original
promissory note was non-recourse. Applying Florida law, the
Eleventh Circuit ruled that the guaranty was not ambiguous. 764
F.2d at 807. It noted that "[m]erely because Anclote cannot be
held liable for a deficiency judgment does not mean that Anclote
did not incur an indebtedness when it signed the note." Id. at
806.
     executed in connection with this Note (except to the extent
     otherwise provided with respect to the guaranties which are
     executed on even date herewith and which guarantee portions of
     the indebtedness evidenced hereby ("Guaranties") and except to
     the extent otherwise provided in the Profit Sharing Agreement
     and except as otherwise provided in the immediately following
     sentence), the undersigned shall have no liability for the
     indebtedness and obligations of the undersigned pursuant to
     the Deed of Trust or any other instrument securing this Note
     or the loan evidenced hereby or executed in connection
     herewith or for the accrued and unpaid interest on this
     Note....

Promissory Note at 4 (emphasis added).13     The defendants cannot

reasonably argue that they did not intend to obligate themselves to

pay the non-recourse portion of the note when the note itself

excludes guarantors from its non-recourse protection.14

     In sum, we find that under Texas law the defendants must bear

responsibility for the unsatisfied indebtedness, up to the limit

stated in their guaranties.   While Northpark is not liable for the

     13
      When a guaranty agreement is absolute and unconditional,
the defendants are deemed to have incorporated all of the terms
of the note into the guaranty. Hopkins v. First Nat'l Bank, 551
S.W.2d 343, 345 (Tex.1977); First Bank of Houston v. Bradley,
702 S.W.2d 683, 686 (Tex.App.—Houston [14th Dist.] 1985, no
writ). Under Texas law, a guaranty is absolute and unconditional
if it "requires no condition precedent to its enforcement against
the guarantor other than mere default by the principal debtor."
United States v. Vahlco Corp., 800 F.2d 462, 466 (5th Cir.1986).
The guaranties in this case do not require a condition precedent
to enforcement other than Northpark's default. The fact that the
guaranties limit the guarantied amount to $3,202,500 does not
preclude them from being absolute and unconditional. See Arndt
v. National Supply Co., 633 S.W.2d 919, 923 (Tex.App.—Houston
[14th Dist.] 1982, writ ref'd n.r.e.).
     14
      The defendants suggest that the non-recourse provision of
the note does not exclude them from its protection. Indeed,
according to the defendants, the non-recourse provision supports
their argument that they are not liable for the unsatisfied
indebtedness because it recognizes that the guaranties only
"guarantee portions of the indebtedness." At most, however, we
believe that this language simply reflects the fact that the
guaranties are limited to a maximum of $3,202,500.
amount of its debt, it nonetheless has incurred an indebtedness.

Because the guaranties unambiguously state that the defendants must

pay the unsatisfied "indebtedness," the defendants have agreed to

accept greater liability for the debt.             This is especially true

since the note itself excludes guarantors from its non-recourse

protection.     We conclude that the district court did not err in

refusing to reconsider the state court summary judgment.

D. "Reasonable" Attorneys' Fees

      The     defendants   argue    that    the   district   court   erred   in

granting the RTC a specific summary judgment of $93,463.60 in

attorneys' fees.      The guaranties provide for the recovery of

"reasonable" attorneys' fees, and according to the defendants, the

use of the term "reasonable" renders the amount of recoverable

attorneys' fees a genuine issue of material fact.             We disagree.

     A party that moves for summary judgment bears the burden to

establish that its opponent failed to raise a genuine issue of

material fact.     Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986).           If the crucial issue is

one on which the movant will bear the ultimate burden of proof at

trial, then the movant can satisfy its summary judgment burden by

submitting evidentiary documents that establish all of the elements

of the claim or defense.           Id.     The burden then shifts to the

nonmovant to demonstrate that summary judgment is inappropriate.

Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 178

(5th Cir.1990).
     In the instant case, the RTC satisfied its initial summary

judgment burden.   It submitted an affidavit from its attorney, G.

Dennis Sheehan, who described the billable rate and the hours

expended and concluded that "[t]he total amount of $93,463.60 is a

reasonable amount for services rendered in this matter."                The

burden then shifted to the defendants to demonstrate that summary

judgment was inappropriate.        The defendants could have filed a

counter affidavit contesting the billable rate that the RTC claimed

was "reasonable," or they could have filed an affidavit arguing

that the   billable   hours    claimed   in   the   Sheehan   exhibit   were

unreasonable. However, the defendants did neither of these things.

They have failed to sustain their burden to demonstrate that

summary judgment was inappropriate.       See Fed.R.Civ.P. 56(e).

                              III. CONCLUSION

     We are unable to conclude that the district court erred in

granting summary judgment in favor of the RTC.            Accordingly, we

affirm the judgment of the district court.

     AFFIRMED.