Peoples Security Bank v. Fritz, R.
1904 MDA 2016
| Pa. Super. Ct. | Oct 13, 2017Background
- Peoples Security Bank (successor to Penn Security) made a $204,000 commercial loan to Cadosia Partners, Inc. on February 16, 2006.
- Five corporate officers, including Robert A. Fritz, executed individual commercial guaranties; Fritz’s guaranty is unconditional and expressly waives requirement that lender exhaust remedies against borrower, collateral, or other guarantors.
- Borrower defaulted; bank demanded payment and sued Fritz in personam as a guarantor on October 19, 2015, seeking principal, interest, late charges, attorneys’ fees, and costs.
- Fritz filed preliminary objections (arguing failure to join other guarantors as necessary parties), then an answer and new matter; the court overruled the preliminary objections and pleadings closed.
- Bank moved for summary judgment with an affidavit from its vice president attesting to the loan balance; Fritz opposed, relying largely on general denials and arguing discovery was needed and other guarantors were necessary parties.
- Trial court granted summary judgment for the bank for $123,475.32 plus accrued interest and fees; Superior Court affirmed, concluding the guaranty was unambiguous and independent and Fritz failed to raise material factual disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether other guarantors were necessary/indispensable parties | Not necessary; bank may proceed directly against any guarantor under the guaranty | Other guarantors share joint interest; their joinder is required | Held: Not indispensable; guaranty permits direct suit against Fritz without joining others |
| Whether summary judgment was proper | Bank: pleadings closed; affidavit shows unpaid balance; no disputed material facts | Fritz: disputed payment credits, affidavit echoes complaint, discovery required; genuine issues exist | Held: Summary judgment proper; Fritz failed to produce specific evidence to oppose affidavit and pleadings deemed admissions |
| Whether Fritz’s general denials sufficed to create factual issues | Bank: General denials are insufficient under Pa.R.C.P. 1029(b) and 1035.3 | Fritz: Denials and asserted need for discovery | Held: General denials deemed admissions; no affirmative evidence presented, so no triable issue |
| Contract interpretation of guaranty (ambiguous or clear?) | Bank: Guaranty is clear, absolute, and unambiguous — obligates Fritz to pay | Fritz: Implied challenges to application/amounts but not to guaranty language | Held: Guaranty unambiguous; construed as written in bank’s favor allowing direct enforcement |
Key Cases Cited
- Columbia Gas Transmission Corp. v. Diamond Fuel Co., 346 A.2d 788 (Pa. 1975) (defines indispensable party doctrine)
- CRY, Inc. v. Mill Service, Inc., 640 A.2d 372 (Pa. 1994) (discusses indispensable parties and jurisdictional consequences)
- Phaff v. Gerner, 303 A.2d 826 (Pa. 1973) (when moving-party affidavit is undisputed, no genuine issue of material fact exists)
- Osprey Portfolio, LLC v. Izett, 67 A.3d 749 (Pa. 2013) (nature and effect of guaranty agreements)
- Trizechahn Gateway LLC v. Titus, 976 A.2d 474 (Pa. 2009) (court may construe unambiguous contracts as a matter of law)
- Nissley v. Candytown Motorcycle Club, Inc., 913 A.2d 887 (Pa. Super. 2006) (standards for contract interpretation and ambiguity)