Avnet, Inc. v. Catalyst Resource Group, LLC
791 F.3d 899
8th Cir.2015Background
- Catalyst borrowed $500,000 from Laurus; David Wild signed a personal guaranty securing Catalyst's loan.
- The guaranty named "Laurus Technologies, Inc, the Holder" but did not expressly mention "successors and assigns" or expressly prohibit assignment.
- Laurus later assigned the promissory note to Avnet as part of a separate forbearance arrangement; Avnet demanded payment and sued Catalyst and Wild when Catalyst defaulted.
- District court entered default judgment against Catalyst; Wild contested enforcement of his guaranty by Avnet, arguing the guaranty was a "special guaranty" enforceable only by the original creditor.
- The district court applied Restatement (Third) of Suretyship & Guaranty § 13, holding Iowa would adopt § 13 and that no § 13 exceptions barred assignment; Avnet moved for and obtained summary judgment against Wild.
- Wild appealed; the Eighth Circuit predicted how the Iowa Supreme Court would rule and affirmed summary judgment for Avnet.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an assignee may enforce a guaranty that names only the original creditor | Avnet: Iowa would adopt Restatement (Third) § 13 allowing assignees to enforce guaranties unless an exception applies | Wild: Guaranty was a "special guaranty" limited to the named creditor and cannot be enforced by an assignee under common law | Court: Iowa would adopt § 13; assignee may enforce unless an exception applies |
| Whether the assignment materially changed Wild's obligations or increased risk (Restatement §13(a)) | Avnet: Assignment did not change Wild's obligations—same duty to pay if borrower defaulted | Wild: Assignment to nonfriendly creditor (Avnet) increased risk because Avnet promptly demanded payment | Court: No material change; different exercise of rights by assignee alone is insufficient to show material increase in burden |
| Whether assignment was barred by statute or public policy (Restatement §13(b)) | Avnet: No statute or public policy bars assignment here | Wild: Did not argue statute/public policy; claimed practical unfairness | Court: No statutory or public-policy bar shown; §13(b) not triggered |
| Whether the original guaranty contract precluded assignment (Restatement §13(c)) | Avnet: Guaranty referred to Laurus as "the Holder," and lacked an express nonassignment clause, so assignment permitted | Wild: Guaranty ambiguous; his undisclosed intent was that the guaranty not be assignable | Court: No express prohibition; ambiguities construed against drafter (Wild); undisclosed intentions immaterial — assignment not precluded |
Key Cases Cited
- Harman v. Hartman, 160 N.W. 295 (Iowa 1916) (guaranties construed like other contracts; liability not extended by implication)
- Andrew v. Austin, 232 N.W. 79 (Iowa 1930) (contracts of guaranty follow general rules of contract construction)
- Hills Bank & Trust Co. v. Converse, 772 N.W.2d 764 (Iowa 2009) (Iowa adopted Restatement (Third) § 22 of suretyship and guaranty)
- Gallagher, Langlas & Gallagher v. Burco, 587 N.W.2d 615 (Iowa Ct. App. 1998) (Iowa court adopted Restatement (Third) § 11)
- Iowa Fuel & Minerals, Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859 (Iowa 1991) (ambiguities in contracts construed against drafter)
- First Nw. Nat'l Bank v. Crouch, 287 N.W.2d 151 (Iowa 1980) (instrument language controls over undisclosed intentions)
- Waechter v. Aluminum Co. of Am., 454 N.W.2d 565 (Iowa 1990) (court looks to parties' outward expressions, not secret intentions)