(Super. Ct. No. 34200800024921CUCOGDS)
The opinion of the court was delivered by: Raye , P. J.
Gray1 CPB v. Kolokotronis
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
We cannot rewrite contracts when the economy suffers a severe downturn. Sotiris Kolokotronis, stung by the crash in the real estate market, seeks to upset a judgment in favor of Central Pacific Bank's successor, Gray1 CPB, LLC. Despite signing a document entitled "Continuing Guaranty" wherein he unconditionally guaranteed to pay an amount equal to the borrower's debt, affixing his signature over the designation "Guarantor" and filing a declaration under penalty of perjury that he understood he would be responsible to pay the borrower's debt if it was unable to do so, Kolokotronis insists the guaranty was not a guaranty but a demand note protected by the antideficiency statutes and the one-action rule. We disagree and affirm the judgment.
The financial world that existed in the summer of 2006, when Kolokotronis (Guarantor) signed a "Continuing Guaranty" related to a $17.7 million loan from Central Pacific Bank (Original Lender) to Sheldon Terrace, LLC (Borrower), had changed drastically when the loan came due in August of 2008. By April of 2008 the value of the real property securing the loan had plummeted and the Original Lender notified the Borrower and the Guarantor that the loan was in default because the value of the security was far less than the balance of the loan. Neither the Borrower nor the Guarantor cured the default. By August 2008 the balance of the note was due. Neither the Borrower nor the Guarantor paid the principal and interest due under the loan at maturity. The Original Lender assigned the note to Gray1 CPB, LLC (the Lender).
The Lender filed the underlying action against the Guarantor for breach of the guaranty and then a motion for summary adjudication. At issue on appeal of the judgment in favor of the Lender are not the inequities and injustices occasioned by the financial crisis or the ethics of those who may have profited from it. Thus many of the allegations and innuendoes peppering the opening brief are irrelevant to the narrow contract question before us. We must turn to the terms of the agreement to determine whether the document entitled "Continuing Guaranty" was a guaranty, as urged by the Lender, or a demand note, as urged by the Guarantor.
Whether the agreement is a guaranty or a demand note has grave implications for the simple reason that a guarantor can waive its right to compel a lender to foreclose on the security first as well as its rights under the various antideficiency statutes. Here the Guarantor waived these rights as we describe below. He seeks to invalidate the dispositive waivers by construing his agreement not as a guaranty, but as a demand note.
Pertinent Terms of the Continuing Guaranty Purpose
As a material inducement to the Original Lender to make the loan to the Borrower, the Guarantor executed the "Continuing Guaranty," which provides as follows:
"In order to induce Lender to extend Credit to Borrower, and in consideration of Credit heretofore, now or hereafter granted to Borrower by Lender, Guarantor agrees . . . ."
Credit is defined in paragraph 1. "The term 'Credit' is used throughout this Continuing Guaranty ('Guaranty') in its most comprehensive sense and means and includes, without limitation, any and all loans, advances, debts, obligations and liabilities of any kind or nature owed by Borrower to Lender, heretofore, now, or hereafter made, incurred or created, arising from the Loan Documents as defined in the Construction Loan Agreement dated August 24, 2006, between Borrower and Lender ('Agreement'), whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, secured or unsecured, whether on original, renewed, extended or revised terms . . . , whether principal, interest, fees, or expenses . . . ."
The Guarantor's liability, pursuant to paragraph 3 of the Continuing Guaranty, is coterminous with the Borrower's. "Guarantor's liability hereunder shall be equal to the full amount of the Credit. In addition, Guarantor agrees to bear and be liable to Lender for the interest and expenses enumerated in paragraph 21 hereof. . . . Any payment received by Lender from Borrower, from any other person or from proceeds of collateral granted by Borrower or any other person shall not reduce Guarantor's liability hereunder."
The Guarantor's pledge is unconditional. Paragraph 4 provides: "Guarantor unconditionally guarantees and agrees to pay to Lender, on demand, in lawful money of the United States of America, an amount equal to the amount of the Credit, and to otherwise perform any obligations of Borrower undertaken pursuant to any Credit. This Guaranty is a guaranty of payment and not of collection. No payment received by Lender from Borrower or any other person or from proceeds of collateral granted by Borrower or any other person shall reduce Guarantor's liability hereunder for the remaining, unpaid Credit."
The Guarantor's pledge is continuing. Thus, according to paragraph 34, "This is a continuing guaranty of the Credit, including those arising after any repayment and reborrowing and under any successive and future transactions which ...