Wells Fargo Financial Leasing, Inc. v. Griffin
970 F. Supp. 2d 700
W.D. Ky.2013Background
- Wells Fargo sued David Griffin and Charles Jones for breach of contract based on personal guaranties (two nearly identical one‑paragraph guaranties) executed for leases between SE Book Company, LLC and VAR Resources and later assigned to Wells Fargo.
- SE Book defaulted on lease payments in October 2012; Wells Fargo demanded payment from guarantors in April 2013 and sued in May 2013.
- Jones signed his guaranty July 19, 2011; Griffin signed July 20, 2011. The Master Lease Agreements were executed/accepted in July/August 2011 and designate Dallas County, Texas for venue/litigation matters.
- Defendants moved to dismiss: Griffin under Rule 12(b)(6); Jones moved under Rule 12(c) (treated as a Rule 12(b)(6) motion because pleadings were not closed). Both argued the guaranties are unenforceable under Kentucky law.
- Court held Kentucky law applies (declining Wells Fargo’s reliance on the Master Agreement’s venue language as a choice‑of‑law selection) and concluded the guaranties do not ‘‘expressly refer’’ to the leased instruments as required by Ky. Rev. Stat. § 371.065(1), so they are unenforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which state law governs enforceability of the guaranties | Texas law governs under the Master Agreements' venue/litigation clause | Kentucky law governs; Texas has minimal relationship to the dispute | Kentucky law applies under Restatement (Second) § 188 (most‑significant‑relationship test) |
| Whether the one‑paragraph guaranties satisfy Ky. Rev. Stat. § 371.065(1) (express‑reference prong) | Guaranties are enforceable (Wells Fargo argued enforceable under either Texas or Kentucky law) | Guaranties are too vague and do not expressly refer to the specific lease or instrument | Guaranties do not expressly refer to the lease instrument; they fail § 371.065(1) and are unenforceable |
| Procedural: validity of Jones’ Rule 12(c) motion timing | Wells Fargo opposed Rule 12(c) as premature | Jones argued for judgment on the pleadings | Court treated Jones’ motion as Rule 12(b)(6) and decided on the merits (no prejudice) |
| Remedy/outcome | Wells Fargo sought contract damages against guarantors | Defendants sought dismissal | Complaint dismissed as to both Griffin and Jones; claims against both dismissed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading requires plausibility)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (federal courts apply forum state choice‑of‑law rules)
- Wallace Hardware Co. v. Abrams, 223 F.3d 382 (6th Cir.) (discussion of Kentucky conflicts approach and § 187/§ 188)
- Schnuerle v. Insight Commc’ns Co., 376 S.W.3d 561 (Ky. 2012) (Kentucky applies Restatement § 188 most‑significant‑relationship test)
- Alliant Tax Credit Fund 31‑A Ltd. v. Murphy, [citation="494 F. App'x 561"] (6th Cir. 2012) (application of Ky. Rev. Stat. § 371.065(1) express‑reference analysis)
- Wheeler & Clevenger Oil Co., Inc. v. Washburn, 127 S.W.3d 609 (Ky. Ct. App. 2004) (statutory framework for guaranty enforceability)
- JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577 (12(b)(6) and 12(c) standards are the same)