759 S.E.2d 152
S.C. Ct. App.2014Background
- Cosman and Petrozzelli formed Hanover Homes Borrower to pursue a Traditions development.
- Bank extended three July 19, 2007 loans to Borrower totaling $3.632 million; Cosman and Petrozzelli signed personal guaranties.
- Guaranties are absolute, unconditional, and create direct, primary, joint and several liability, with waivers of defenses.
- Borrower encountered financial difficulties; notes renewed October 28, 2009.
- Borrower executed short sales with Bank consent in 2010–2011 to satisfy debt; Bank received proceeds.
- October 22, 2010 Agreement released Borrower and Petrozzelli from liability but stated no release of other guarantors; Bank sued Cosman in December 2011; trial court granted partial summary judgment to Bank; Cosman appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations applicability | Cosman: limitations run from 2007 note date. | Bank: accrual tied to maturity and discovery rules apply. | Not barred; accrual based on note maturity and discovery rule. |
| Effect of guaranties and borrower release | Cosman: release of Borrower discharges Cosman under guaranties. | Bank: guaranties waivers and independent obligations; release of Borrower not discharge. | Guaranties are ambiguous; reverse summary judgment and potentially discharge Cosman. |
| Breaches of contract with other defenses | Cosman: defenses exist; summary judgment improper. | Bank: defenses do not foreclose liability. | Unnecessary to decide due to disposition on guaranties. |
Key Cases Cited
- Citizens & S. Nat’l Bank of S.C. v. Lanford, 313 S.C. 540 (1994) (guaranty of payment independent from note; lender rights)
- TranSouth Fin. Corp. v. Cochran, 824 S.C. 290 (Ct.App.1996) (guaranty separate from principal obligation; release of borrower does not discharge guarantor)
- Progressive Max Ins. Co. v. Floating Caps, Inc., 405 S.C. 35 (2013) (contract ambiguity; construe against drafter)
- Mathis v. Brown & Brown of S.C., Inc., 389 S.C. 299 (2010) (ambiguities construed against drafter)
- Gignilliat v. Gignilliat, Savitz & Bettis, L.L.P., 385 S.C. 452 (2010) (summary-judgment review in light of ambiguities)