Buridi v. Leasing Group Pool II, LLC
447 S.W.3d 157
Ky. Ct. App.2014Background
- Thirty physician shareholders of Kentuckiana Medical Center (KMC) each signed two identical "Unconditional Guaranty of Payment" forms in 2009, agreeing to be "jointly and severally" liable for KMC’s lease obligations to The Leasing Group Pool II, LLC (LGP). KMC later executed three equipment/furniture leases with LGP and defaulted in 2010.
- Appellees (LGP and two banks, CUB and PBM, assignees of parts of the leases) sued the physicians for roughly $2.89 million under the guaranties.
- Plaintiffs (physicians) admitted signing the guaranties but argued they were unenforceable under KRS 371.065 because the guaranties did not "expressly refer" to specific leases, lacked termination dates, and were not contemporaneous with the leases; they also alleged fraud/mistake based on assurances by two fellow doctors that liability would be pro rata under an earlier KI operating agreement.
- Appellees served requests for admissions; the physicians failed to timely respond, so several facts (including amounts due and execution of guaranties) were deemed admitted under CR 36.02. Appellees moved for summary judgment attaching those deemed admissions and an affidavit of LGP’s custodian of records showing the amounts due.
- The trial court denied the physicians’ motion to withdraw admissions, held the guaranties were enforceable under KRS 371.065 because they expressly referred to leases by describing the leased property and location, and granted summary judgment for $2,890,405.80 (retaining jurisdiction to credit payments). The court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability under KRS 371.065 | Guaranties did not "expressly refer" to the leases, lacked termination date and maximum detail; not contemporaneous with leases | Guaranties expressly referred to leases by naming lessee/lessor, describing leased items and location and stating aggregate cap; statute permits noncontemporaneous guaranties | Held: Guaranties valid under KRS 371.065 based on internal references (description/location/purpose); contemporaneous execution not required |
| Liability scope (joint & several vs pro rata) | Doctors relied on oral assurances from fellow doctors and KI operating agreement limiting liability to pro rata shares | Guaranties unambiguously state signatories are "liable jointly and severally"; no evidence Appellees or their agents misrepresented guaranty terms | Held: No actionable fraud or mutual mistake against Appellees; unilateral mistake by signatories insufficient to rescind or reform guaranties |
| Effect of assignments (whether assignees can enforce guaranties) | Leases were assigned to banks, so guaranties not enforceable by assignees | Leases’ merger clause incorporated guaranties into leases; assignees of leases may enforce guaranties | Held: Assignees (CUB, PBM) can enforce guaranties via assignment/merger clause |
| Denial of withdrawal of matters deemed admitted (CR 36.02) and summary judgment | Late responses excused (counsel claimed nonreceipt); withdrawal would promote merits and Appellees not prejudiced | Appellants untimely failed to respond twice; Appellees would be prejudiced by reopening discovery; admissions were subsumed by uncontroverted affidavit and Appellants offered no contrary evidence before summary judgment | Held: No abuse of discretion; withdrawal denied — (prejudice analysis accepted and court determined allowing withdrawal would not serve the merits) |
Key Cases Cited
- Steelvest, Inc. v. Scansteel Service Ctr., Inc., 807 S.W.2d 476 (Ky. 1991) (summary judgment standard and need for nonconclusory affirmative evidence to resist summary judgment)
- Wheeler & Clevenger Oil Co., Inc. v. Washburn, 127 S.W.3d 609 (Ky. 2004) (de novo review for statutory interpretation)
- Smith v. Bethlehem Sand & Gravel Co., LLC, 342 S.W.3d 288 (Ky. App. 2011) (delay between note and guaranty execution can be immaterial when part of single transaction)
- Campbellsville Lumber Co. v. Winfrey, 303 S.W.2d 284 (Ky. 1957) (unilateral mistake insufficient to rescind contract)
- Abney v. Nationwide Mut. Ins. Co., 215 S.W.3d 699 (Ky. 2006) (elements and clear-and-convincing standard for relief based on mutual mistake)
- F.D.I.C. v. Prusia, 18 F.3d 637 (8th Cir. 1994) (Fed. R. Civ. P. 36(b) analysis of prejudice required to deny withdrawal of admissions)