23 N.W.3d 444
Neb.2025Background
- Todd and Nancy Garrelts signed personal guaranties for a $1.5M line of credit loaned by Henderson State Bank (HSB) to Midwest Auger Distributing, L.L.C., a commercial entity they formed with David Lynn.
- The Garrelts’ guaranties were absolute and unconditional, waiving defenses and requiring no notice for renewals or extensions.
- HSB later assigned its rights under the loan and guaranties to its parent company, Henderson State Company (HSC), which sued the Garrelts for breach of the guaranty after Midwest Auger defaulted.
- The Garrelts counterclaimed and joined third parties, alleging fraudulent concealment, misrepresentation, civil conspiracy, and breach of the covenant of good faith and fair dealing.
- The district court entered summary judgment for HSC, dismissing all counterclaims and deeming the Garrelts liable under the guaranties; the Garrelts appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of HSC to sue as assignee | HSC has a valid written assignment, has standing | No timely written assignment produced, so no standing | HSC proved written assignment, had standing |
| Liability under personal guaranties | Guaranties are clear; terms control; Garrelts liable | Liability inappropriate due to lack of disclosures, and other conditions | Liability determined by plain terms; Garrelts liable |
| Fraudulent concealment / misrepresentation | No duty to disclose to Garrelts; no false statements | Bank owed duty to inform about financial risks, misrepresented facts | Bank owed no such duty; counterclaims fail |
| Counterclaims including civil conspiracy, good faith breach | No underlying tort or breach shown | Bank's practices violated reasonable expectations | No material factual dispute; counterclaims dismissed |
| Validity of post-judgment confession filing against estate | Confession by former personal representative invalid | Confession should shift liability to estate | No authority post-termination; filing is a nullity |
Key Cases Cited
- Cattle Nat. Bank & Trust Co. v. Watson, 293 Neb. 943 (sets out rules for interpreting guaranty contracts)
- Braunger Foods v. Sears, 286 Neb. 29 (guaranty obligations are determined by the parties’ intentions and express terms)
- George Clift Enters. v. Oshkosh Feedyard Corp., 306 Neb. 775 (conspiracy requires an underlying tort)
- Hastings State Bank v. Misle, 282 Neb. 1 (burden on plaintiff to show creditor’s duty to disclose to surety)
- Niklaus v. Abel Construction Co., 164 Neb. 842 (actions by non-lawyers on behalf of estate are nullities)