258 P.3d 1154
N.M. Ct. App.2011Background
- Compass Bank loaned $500,000 to Speedway, secured by personal guaranties from five guarantors, including Randles and KCB members.
- Memorandum Agreement allocated joint and several liability: each guarantor liable for 1/5 of all amounts after written demand.
- Compensation Agreement promised approximately $495,000 total to guarantors in exchange for guarantying Speedway's obligations.
- Speedway defaulted in 2003; three guarantors paid the entire amount, formed KCB, and assigned rights to KCB; Randles paid $113,406 under a judgment.
- Bankruptcy: KCB claimed $500k principal and $500k premium; Speedway proposed $1,000,000 to settle both; Randles objected to $200k portion; settlement left $200k in trust.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can Randles recover the principal amount as a contributing cosurety? | Randles argues contribution allows recovery from Speedway to the extent of her contribution. | KCB contends Randles breached the Memorandum Agreement and cannot recover; subrogation/assignment not applicable. | Randles entitled to $100,000 principal; reversed summary judgment for KCB. |
| Is Randles entitled to the $100,000 premium under the Compensation Agreement? | Premium due upon execution of guaranty, not necessarily upon default. | Read with Memorandum Agreement; performance required before premium; agreements construed together. | Ambiguous contract language; remand for fact-finder to decide whether premium triggers on performance. |
| Does unclean hands bar Randles from recovery? | Unclean hands should not bar relief given remedial postures and remedy already obtained by KCB. | Randles' conduct of not sharing burden constitutes inequitable conduct warranting forfeiture. | Unclean hands not applied; Randles not barred. |
Key Cases Cited
- Master Builders, Inc. v. Cabbell, 95 N.M. 371 (Ct.App. 1980) (read and construe separate instruments together if same transaction)
- Lampton v. Staebler, 252 Ky. 405 (1934) (inequitable conduct can affect contribution rights between cosureties)
- Gen. Electric Co. v. Klein, 129 A.2d 250 (Del.Ch. 1956) (represents equity in relief when proper conduct is shown)
- Mark V, Inc. v. Mellekas, 114 N.M. 778 (1993) (extrinsic evidence allowed to determine contract ambiguity)