Wong v. State
2011 ND 201
| N.D. | 2011Background
- TMGI and individuals guaranteed a $2.6 million KRE loan from Alerus secured by a first mortgage; guaranties were unconditional and extended to all debt of the Borrower; KRE defaulted in 2010 and Alerus pursued remedies, including foreclosure; sheriff’s sale was canceled due to KRE’s bankruptcy; Alerus sought judgment against guarantors for the guaranteed amount; district court granted summary judgment against TMGI and Marcil for $2,520,383.07; Rosenberg’s appeal was stayed due to bankruptcy while this appeal was pending.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 32-19-06.1 applies to guaranty actions. | Alerus argues §32-19-06.1 governs actions involving foreclosure of commercial real estate. | TMGI/Marcil contend guaranties fall under anti-deficiency protections via §32-19-06.1 and thus require formal deficiency proceedings. | §32-19-06.1 does not apply to guaranties; guarantors are not protected by anti-deficiency statutes. |
| Whether Alerus impermissibly split its causes of action. | Alerus can pursue guaranty and foreclosure separately; not a double recovery unless misused. | Separate actions constitute improper split of causes of action. | No improper split; actions involve different parties and distinct guaranty obligations. |
| Whether the guaranties are contracts of guaranty vs. surety/suretyship. | Guaranties create secondary liability; primary liability not triggered until Borrower defaults. | Agreed to secondary liability; some language could imply broader liability. | Contracts are guaranties, not surety contracts. |
| Whether the guaranties are unenforceable adhesion contracts. | Guaranties were negotiated by sophisticated parties; waiver provisions are enforceable. | Adhesion concerns and unconscionability due to unequal bargaining power. | Not unenforceable adhesion contracts; evidence shows experienced businesspeople and no procedural unconscionability. |
| Whether fraud/mistake/waiver/estoppel defenses preclude summary judgment. | Defenses alleged but not pled with particularity; parol evidence governs contract terms. | Fraud/mistake defenses exist and create genuine issues of material fact. | No genuine issues; parol evidence rule bars claims; summary judgment proper. |
Key Cases Cited
- First Int'l Bank & Trust v. Peterson, 2011 ND 87 (ND 2011) (summary judgment standard; de novo review on record)
- Lucas v. Riverside Park Condo. Unit Owners Ass’n, 2009 ND 217 (ND 2009) (summary judgment/appellate standard; favorable view of record)
- State v. Erickson, 534 N.W.2d 804 (ND 1995) (statutory words understood in ordinary sense; involve meaning)
- Mueller, 294 N.W.2d 643 (ND 1981) (guarantor vs. anti-deficiency statute; extent of protections)
- Anseth, 503 N.W.2d 568 (ND 1993) (guarantors not protected by anti-deficiency statutes; distinction from partners' guaranty)