Bank of America, N.A. v. Timothy G. Fay, 242 A.3d 38

Stonestreet Hospitality Realty Co., LLC (Fay 70%, Patrick 30%) borrowed $21,808,000 from Bank of America in 2008 to build a Connecticut hotel; Stonestreet granted a first mortgage and Fay and Patrick signed personal guaranties executed in Rhode Island that contained a Rhode Island choice-of-law clause.
The loan matured in 2014 and Stonestreet defaulted; a September 2015 forbearance (governed by Connecticut law) failed to produce payment.
Bank foreclosed in Connecticut: strict-foreclosure judgment quantified the debt, and in July 2018 the Connecticut Superior Court entered a deficiency judgment against Stonestreet for $5,022,003.67 (no appeal).
Bank sued the guarantors in Rhode Island; the Superior Court (1) granted partial summary judgment holding the guarantors liable under the guaranty, and (2) later granted summary judgment binding the guarantors to the Connecticut deficiency (jointly and severally liable for $5,022,003.67 plus interest).
Guarantors appealed, arguing (a) Connecticut Gen. Stat. § 49-1 barred deficiency claims against nonparty guarantors; (b) they were not bound by the Connecticut deficiency because they were not parties; and (c) Fay’s motion to amend his answer was wrongly denied without a hearing.
The Rhode Island Supreme Court affirmed the Superior Court on all counts.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether guarantors were liable under the guaranty (partial summary judgment)	Guaranty contains enforceable Rhode Island choice-of-law clause; Rhode Island law governs guaranty and makes guarantors liable	Conn. Gen. Stat. § 49-1 bars deficiency/collateral action against guarantors who were not parties to foreclosure	Court: Choice-of-law clause controls; Rhode Island law governs the guaranty; § 49-1 inapplicable; liability affirmed
Whether guarantors are bound by the Connecticut deficiency judgment	Full faith and credit/res judicata apply; guarantors were in privity with Stonestreet so Connecticut deficiency precludes relitigation	Guarantors were not parties to Connecticut proceedings and therefore cannot be bound by that judgment	Court: Applied Connecticut res judicata law; guarantors in privity (closely held LLC, active participation, aligned interests); res judicata binds them to the Connecticut deficiency
Whether denial of Fay’s motion to amend answer without a hearing was error	Bank: denial proper because the substance of the proposed defense (§49-1) was considered and rejected	Fay: Rule 15 requires leave freely given; denial without hearing/explanation was erroneous	Court: Fay had opportunity to raise the defense and the hearing justice addressed it in his decision; denial without a separate hearing was not erroneous

Nelson v. Allstate Insurance Company, 228 A.3d 983 (R.I. 2020) (standard of review for summary judgment)
DeFontes v. Dell, Inc., 984 A.2d 1061 (R.I. 2009) (choice-of-law provisions generally enforceable)
DeCesare v. Lincoln Benefit Life Company, 852 A.2d 474 (R.I. 2004) (enforceability and interpretation of contractual choice-of-law clauses)
JP Morgan Chase Bank, N.A. v. Winthrop Properties, LLC, 94 A.3d 622 (Conn. 2014) (guaranty is a separate and distinct obligation from the secured debt)
Weiss v. Weiss, 998 A.2d 766 (Conn. 2010) (res judicata bars later actions by same parties or those in privity)
Joe’s Pizza, Inc. v. Aetna Life and Casualty Company, 675 A.2d 441 (Conn. 1996) (closely held entity exception to nonpreclusion of owners by corporate judgments)
Lamarque v. Fairbanks Capital Corp., 927 A.2d 753 (R.I. 2007) (application of full faith and credit to out-of-state judgments)