Commercial Division Blog

Posted: December 27, 2023 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Seth D. Allen, Joshua Wurtzel, Channing J. Turner / Categories Loan, Guaranty

Court Grants Reargument of Summary Judgment Decision, Holds Defendant Guarantor Liable for $10 Million in Outstanding Debt of Other Defendants

On November 28, 2023, in Josh Weisberg v. Gary D. Standard, et al., Index No. 651417/2022, Justice Margaret A. Chan granted Plaintiff Josh Weisberg’s motion for reargument of summary judgment seeking to hold a guarantor liable for more than $10 million owed severally by all the other Defendants.  The Court had granted Plaintiff’s earlier motion for summary judgment on liability against the Defendant debtors but denied it as to the apportionment of the amount of liability severally among the various Defendants.  When considering Plaintiff’s reargument, the Court highlighted that the guarantor, Gary Standard, guaranteed the underlying note “fully and unconditionally” and agreed to language stating, “the Guaranty shall be directly enforceable against [Gary, as guarantor] without first resorting to [the other Defendants] or exhausting any remedies against [those Defendants].”  The Court found that this language, and the circumstances of the case, warranted reargument and the granting of summary judgment on liability and damages against the guarantor.  The Court explained: 

The Prior Decision overlooked the fact that while the [other Defendants] are severally liable for the Note as borrowers, section 3.3 of the Note enables the plaintiff to directly enforce the Guaranty against [the guarantor] for the entire amount owing under the Note, without first resorting to the Trusts or exhausting any remedies against the Trusts. . . . [S]ummary judgment should have been granted on damages—for the entire amount due under the Note—against Gary as guarantor of the Note.

This decision highlights the importance of language in guarantee agreements that define the conditions under which a lender may resort to collecting from a guarantor.  The attorneys at Schlam Stone & Dolan frequently litigate disputes concerning promissory notes, loans, and guarantees. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.