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First Southern National Bank, N.A. v. Catsam

United States District Court, D. New Hampshire

September 19, 2019

First Southern National Bank, N.A.
Nick A. Catsam, John A. Catsam, and Joseph Catsam


          Andrea K. Johnstone United States Magistrate Judge

         Plaintiff First Southern National Bank, N.A. (“First Southern”) holds a promissory note on which the borrower defaulted. Defendants Nick A. Catsam, John A. Catsam and Joseph Catsam (“the Catsams”), executed a personal Guarantees to help secure the debt underlying the note. In February 2019, First Southern filed suit to collect the amount due on the note, asserting claims of breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. See Complaint (Doc. No. 1). The defendants have defaulted. Doc. no. 8. Plaintiff's unopposed motion for default judgment (Doc. No. 10) is before the undersigned magistrate judge for a report and recommendation. For the reasons that follow, the district judge should grant plaintiff's motion for default judgment.

         I. Standard of Review

         After default is entered and when, as here, the amount at issue is not a sum certain, “the party must apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2); see also KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 18-19 (1st Cir. 2003).[1] “Although a defaulting party admits the factual basis of the claims asserted against it, the defaulting party does not admit the legal sufficiency of those claims.” 10 James Wm. Moore, Moore's Federal Practice § 55.32[1][b] (3d ed. 2013). Before entering default judgment, the court must determine whether “[t]he claimant [has] state[d] a legally valid claim for relief.” Id.; see also Ramos-Falcon v. Autoridad de Energia Electrica, 301 F.3d 1, 2 (1st Cir. 2002).

         II. Background

         By virtue of their default, defendants have admitted the following facts, as set forth in plaintiff's Complaint. The defendants are members of Raintree Recreational Ventures, LLC (“RRV”). In 2003 RRV purchased the Newport Golf Club, forming Newport Golf Club, Inc. (“NGCI”) to operate the club.

         On January 30, 2009, RRV and NGCI entered into a loan agreement with Mascoma Savings Bank (“Mascoma”), for Loan No. 2038090 in the principal amount of $1, 549, 765.00. In return, RRV and NGC (collectively “Borrower”) gave Mascoma a promissory note, whereby Borrower promised to repay the principal, plus interest calculated pursuant to an “Interest Calculation Method, ” in ten (10) years, with a final payment due November 28, 2019. The note is secured by a mortgage, an assignment of rents and a fixture filing on real estate located at 112 Unity Road, Newport, NH (the club's location), and a security interest in all the business assets of NGCI. The mortgage and related UCC filings were recorded in the Sullivan County New Hampshire Registry of Deeds and the New Hampshire Secretary of State's office.

         The note is also secured by a “Continuing Guarantee of Payment and Performance” (the “Guaranty”), which each of the Defendants executed. The Guaranty provides:

For good and valuable consideration, Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower, or any one or more of them, to Lender, and the performance and discharge of all Borrower's obligations under the Note and related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness . . . . Guarantor will make any payment to Lender or its order, on demand . . . . Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

         The Guaranty binds the Guarantor to current and future “Indebtedness, ” which is defined in relevant part as:

[A]ll of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law … ‘Indebtedness' includes … future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations . . . .

         The Guaranty is binding on the Guarantor unless and until the Guarantor revokes it in writing. Any revocation applies only to new indebtedness created after actual receipt by the Lender of the Guarantor's written revocation.

         The defendants each executed a Guaranty, personally guaranteeing payment of the Indebtedness (“Guarantor” or collectively the “Guarantors”). Under the Guaranty, the Guarantors are jointly or severally or jointly and severally liable for payment of the Promissory Note and all Indebtedness.

         On July 19, 2012, Mascoma sold the Note to First Southern. As part of that transaction, Mascoma assigned to First Southern the mortgage, the rents, and the security interests referenced in its UCC financing statements. The assigned mortgage and UCC financing statements were filed with the Sullivan County Registry of Deeds and the New Hampshire Secretary of ...

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