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Camden National Bank v. Greystone Select Holdings, LLC

United States District Court, D. New Hampshire

November 3, 2017

Camden National Bank
v.
Greystone Select Holdings, LLC

          MEMORANDUM ORDER

          Joseph N. Laplante United States District Judge

         This case involves a dispute over the terms of a loan guaranty. Invoking this court's diversity jurisdiction, 28 U.S.C. § 1332, plaintiff Camden National Bank (“Camden”) claims that Greystone Select Holdings, LLC (“Greystone”), which guaranteed a loan Camden made to a third-party borrower, breached its contractual obligation and was unjustly enriched when it refused to pay Camden a contractually-required sum following the borrower's bankruptcy. Claiming that the guaranty agreement requires Camden first to foreclose on the borrower's collateral before its obligation to pay is triggered and that there can be no unjust enrichment where the parties' obligations are delineated by contract, Greystone moves to dismiss. See Fed. R. Civ. P. 12(b)(6). After reviewing the parties' submissions and the contract at issue, and conducting oral argument, the court finds that the contract is ambiguous as to whether foreclosure is required in order to trigger Greystone's obligation. The motion to dismiss Camden's breach of contract claim is therefore denied. Greystone is correct, however, that Camden's unjust enrichment claim can not lie where, as here, the parties' rights and responsibilities are circumscribed by a valid contract. That claim is, therefore, dismissed.

         I. Applicable legal standard

         To state a claim for relief and withstand a motion to dismiss, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Martinez v. Petrenko, 792 F.3d 173, 179 (1st Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In ruling on such a motion, the court accepts as true all well-pleaded facts set forth in the complaint and draws all reasonable inferences in the plaintiff's favor. See, e.g., Martino v. Forward Air, Inc., 609 F.3d 1, 2 (1st Cir. 2010).

         The court “may consider not only the complaint but also facts extractable from documentation annexed to or incorporated by reference in the complaint and matters susceptible to judicial notice.” Rederford v. U.S. Airways, Inc., 589 F.3d 30, 35 (1st Cir. 2009) (internal quotations omitted). The court “need not, however, credit bald assertions, subjective characterizations, optimistic predictions, or problematic suppositions, ” and “[e]mpirically unverifiable conclusions, not logically compelled, or at least supported, by the stated facts, deserve no deference.” Sea Shore Corp. v. Sullivan, 158 F.3d 51, 54 (1st Cir. 1998) (internal quotations omitted). Guided by these standards, the court turns first to Camden's allegations and the parties' agreement.

         II. Factual background

         A. The loan and guaranty

         In 2014, operators of an assisted living facility in Rye, New Hampshire, borrowed $12 million from Camden to use in connection with the operation of the facility, known as Sanctuary Care at Rye.[1] The loan was memorialized in a note executed in Camden's favor.[2] As additional security for the loan and note, the defendant executed a Limited Guaranty of Payment and Performance in Camden's favor.[3] The gist of the Guaranty is that Greystone is obligated to pay up to $2 million to Camden if the borrower defaults on the loan.[4]

         In 2017, the borrower filed petitions for protection under Chapter 11 of the United States Bankruptcy Code. This was a default under the terms of the loan.[5] Relying on the default and certain language in the guaranty agreement, Camden demanded $2 million from Greystone, which it has refused to pay, claiming that the Guaranty requires Camden to foreclose on the borrower's collateral before any payment is required.[6]

         B. Disputed guaranty language

         While they disagree about its meaning, the parties agree that interpretation of the following contractual provision is determinative of Greystone's obligation:

Notwithstanding anything contained herein to the contrary, Guarantor's liability under this Guaranty shall be (a) limited in amount to Two Million and 00/100 Dollars ($2, 000, 000.00) (the “Maximum Guaranty Amount.”) and (b) Guarantor's liability and the performance of its obligations under this Guaranty shall only be due, payable and enforced against the Guarantor after Lender has (a) completed a foreclosure action (judicial or non-judicial) or accepted a deed in lieu of foreclosure with respect to the Borrower's collateral securing the Loan (“Loan Collateral”) and (b) at the written request of the Guarantor and at Guarantor's sole cost obtained an initial determination by a court of competent jurisdiction, exclusive of any appeals, against Jonathan McCoy and Scott Kingsley (“Sponsor Guarantors”) regarding its ability to enforce their guaranty executed and delivered in conjunction with the Loan; provided however, should Borrower or either of the Sponsor Guarantors file a voluntary or collusive involuntary bankruptcy, then Guarantor's liability and the performance of its obligations under this Guaranty shall become immediately due, payable and enforceable in an amount equal to the lesser of the Maximum Guaranty Amount or the deficiency (the “Deficiency”) due from Borrower after completion of the foreclosure of the Loan Collateral. Lender's outstanding loan balance (the “Lender's Outstanding Loan Balance”) shall be the sum of the outstanding principal then due on the Loan, plus all accrued interest and costs and expenses, including reasonable attorneys' fees. The amount of Lender's Deficiency for purposes of this paragraph, if any, subsequent to completion of the foreclosure shall be Lender's Outstanding Loan Balance less the third party net sales price (i.e. the gross sales price less transfer taxes and prorations paid by Lender). If the Lender acquires the Mortgaged Property at foreclosure, the amount of the Lender's Deficiency, if any, shall be the Lender's Outstanding Loan Balance less the amount bid in by the Lender.

(Emphasis added).

         III. Legal analysis

         A. Breac ...


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