GODDARD v. LOOSIGIAN (2020)

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

The plaintiff, Thomas W. Goddard, brought a claim for contribution against the defendant, Anne M. Loosigian, in Superior Court, alleging that the parties were coguarantors on a pair of promissory notes. The parties filed cross motions for summary judgment. A judge of the Superior court denied Goddard's motion, allowed Loosigian's motion, and dismissed the complaint. The judge ruled that Goddard was not a coguarantor, but was instead a principal debtor and that, as a result, he had no right of contribution against Loosigian. We affirm.

Background. We summarize the evidence in the light most favorable to Goddard, against whom judgment has entered. See Boazova v. Safety Ins. Co., 462 Mass. 346, 350 (2012). Beginning in approximately 2001, Goddard and John Loosigian (John), Loosigian's husband, were in business together. Each was a trustee of J&T Realty Trust (J&T) and a member of Quality Plant Growers LLC (QPG). On December 27, 2001, Goddard and John obtained a business loan and executed two promissory notes on behalf of J&T and QPG jointly. The first paragraph of each of the notes stated: “For value received, the undersigned (collectively: ‘Borrower’) jointly and severally promise to pay ․ the principal sum.” On each of the notes, Goddard and John signed on three separate signature lines identifying each as a “Trustee of the J&T Realty Trust,” as a “Member” of QPG, and as an “Individual.” Loosigian signed a separate instrument entitled “Continuing Guaranty” in which she agreed to act as a guarantor.²

J&T and QPG ultimately failed. After their assets were liquidated to pay down the outstanding debt, Goddard paid off the remainder of the debt in the amount of $411,782.02. John filed for and was ultimately granted Chapter 7 bankruptcy protection, discharging his debt under the notes.

Goddard then filed this action seeking contribution from Loosigian. The parties filed cross motions for summary judgment. Goddard argued that by signing the notes in his individual capacity, he was signing as a guarantor and not as a principal obligor and that he therefore had a right to contribution from Loosigian as a coguarantor. Loosigian argued that Goddard was never a guarantor, but rather that he and John were principal obligors and that as such Goddard had no right of contribution against her.

The judge observed that “[t]here is nothing in the note to indicate that the individual liability of Goddard was limited to that of a guarantor,” and that, to the contrary, he was defined as a “borrower” in the loan documents. The judge thus concluded that Goddard was a principal obligor, with “individual liability under the notes as a debtor,” and, accordingly, that Goddard did not have a right of contribution from Loosigian. As noted, the judge denied Goddard's motion for summary judgment, allowed Loosigian's motion for summary judgment, and dismissed the action.

Discussion. Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002); Boazova, 462 Mass. at 350. We review a decision to grant summary judgment de novo. See Boazova, supra. “In a case like this one where both parties have moved for summary judgment, the evidence is viewed in the light most favorable to the party against whom judgment [has entered]” (citation omitted). Id.

The parties agree that Loosigian was a guarantor of the notes. The central dispute is whether Goddard also was a guarantor, or whether he was only a principal obligor. As explained in Seronick v. Levy, 26 Mass. App. Ct. 367, 372 (1988), a right of contribution exists only where the obligations of the parties are “equal in kind and degree.” As relevant here, this means that a right of contribution may exist as between principal obligors on a debt, or as between coguarantors, but not as between a principal obligor and a guarantor. See id. at 372-373.

Goddard signed the notes in his individual capacity as well as in his capacity as a trustee of J&T and a member of QPG. The terms of the notes identify all of the signatories, including Goddard in his individual capacity, collectively as the “Borrower” who, “jointly and severally promise[d] to pay ․ the principal sum.” Thus, Goddard, in his individual capacity, was a “borrower,” that is, a principal obligor, on each of the notes. As the judge correctly observed, nothing in the note identifies Goddard as a guarantor. Because Goddard was a principal obligor, his obligation is not equal in kind or degree to that of Loosigian, a guarantor. Seronick, 26 Mass. App. Ct. at 372-373. Thus, Goddard has no right of contribution against Loosigian, for “as between a principal and a guarantor there is no right of contribution.” Id. Furthermore, because Goddard, as a principal obligor, paid the outstanding amount of the debt, “the obligation of any guarantor [including Loosigian] is extinguished.” Id. at 373.

Goddard claims that the judge erred in relying primarily on the terms of the notes to determine Goddard's status and urges us to look instead to the loan agreements and other loan documents for support of his position that he signed as a coguarantor. This argument is unavailing. Even if we were to read the various loan documents together as part of one transaction, see Chase Commercial Corp. v. Owen, 32 Mass. App. Ct. 248, 250-251 (1992), nothing in the other loan documents suggests that Goddard was anything other than a primary obligor. Goddard concedes that he never signed a separate document explicitly making him a guarantor. The only guaranties referred to in the loan agreements are those provided by Loosigian and by the Goddard Family Trust. Goddard also points to the language used in several parts of the loan applications as indicating that he was a coguarantor with Loosigian. We have considered this language and conclude that it does not establish Goddard as a coguarantor.

Finally, Goddard argues that he, Loosigian, and John were “accommodation parties” to the notes under G. L. c. 106, § 3-419, and that their obligations were equal in kind and degree despite the fact that Goddard and John did not sign separate documents as guarantors. There is no merit to this argument. Under G. L. c. 106, § 3-419 (a), an “accommodation party” is one who “signs the instrument [i.e., the note] for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument.” Loosigian did not sign the notes. She signed a separate contract entitled “Continuing Guaranty” in which she assumed the status of guarantor. Thus, in terms of the Uniform Commercial Code, Loosigian was a surety, and not an accommodation party. See G. L. c. 106, § 3-419 cmt. 3 (“[I]f M issues a note payable to the order of P, and S signs a separate contract in which S agrees to pay P the amount of the instrument if it is dishonored, S is a surety but is not an accommodation party”).

Judgment affirmed.

FOOTNOTES

2.   The loan agreement also identifies the Goddard Family Trust as a guarantor. No claim is brought by or against the Goddard Family Trust in this action.