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____________________
No. 95-1359
Plaintiff, Appellant,
v.
ALBERT J. ALLETZHAUSER,
Defendant, Appellee.
____________________
____________________
____________________
_________
Harry C. Beach, with whom Leonard F. Clarkin, Paul B. Bottino
______________
__________________ _______________
Clarkin, Sawyer & Phillips, P.C. were on brief for appellee.
________________________________
____________________
CYR,
CYR,
Circuit Judge.
Circuit Judge.
______________
claim
for breach
of
a loan
entitled to judgment
under Massachusetts
Laura
Thorn,
Ltd.
Alletzhauser ("Alletzhauser").
is not
Plaintiff
guaranty
by defendant
As we conclude
pursuant to
law, we vacate
Albert
J.
that Alletzhauser
Fed. R. Civ.
P. 56(c)
remand for
further proceedings.
I
I
BACKGROUND1
BACKGROUND1
__________
On
April 14,
loaned $250,000 to
1989,
an individual
named Laura
Thorn
("HTRA").
Ltd., and
Thorn, Ltd.
Under the
terms of
in turn
HTRA
obligations to
general partner
a Subordinated Loan
was a
in HTRA.
Agreement ("Agreement")
Beverly National
Bank or
and future
its successors.2
rights under
general
partnership interest in
HTRA to
a transfer of its
Hamilton Laboratories,
____________________
1291.
most favorable
to Thorn, Ltd.,
1332(a)(2) (diversity)
which summary
Inc.
induce
("HLI"), a
the
transfer,
Alletzhauser
(as
by Alletzhauser.
guarantor),
HTRA
loan
guaranty
agreement
("the
Guaranty") on
July
11,
To
(as
into a
1991,
Thorn, Ltd.
section 1
Pursuant to
In
against
Guaranty.
Alletzhauser in
Alletzhauser
Ltd. commenced
federal district
denied
court to
liability, and
this action
enforce its
asserted as
an
ture."
____________________
Borrower to
the Lender of
the Subordinated
Obligations
the Guarantor
___ _________
to make any
__ ____ ___
payment .
_______
. . (b)
which the
_____ ___
Lender
______
would be obligated to
_____ __ _________ __
(Emphasis added.)
granting summary
to
strike certain
affidavits
erred in
discretion in refusing
submitted in
support of
Alletz-
II
II
DISCUSSION4
DISCUSSION4
__________
but
since the
responds
and
is not yet
due.
became due on
Thorn,
Ltd.
April 1, 1994,
since HTRA has not paid, Alletzhauser must honor the Guaran-
ty.
The
parties agree
that
Massachusetts law
governs
their
dispute.
Under
Massachusetts
law, a
guarantor's
liability is
guarantor.
of the
a general
construed against
the
prompt
Obligations when
____
note 3,
2 (emphasis added).
. . . . "
See
___
supra
_____
____________________
is reviewed de novo
__ ____
under the
Alexis v.
______
payment
look to Alletzhauser
for
under the Guaranty, and the parties agree that the court
repay
the Note
Thorn, Ltd.
plain
section
as
long as
insists that
senior
debt remained
outstanding.
misinterpreted the
1.
This
further provides
provides for
periodic
payments by
HTRA and
infra Appendix p. i,
_____
See
___
1.
sions
in section
4 plainly
nation
provision:
"Notwithstanding any
schedule set
following subordi-
other provision
of the
____________________
1350-
Alletz-
is not uncommon
in circumstances
where the
junior
of
the borrower.
Carl D.
Lobell &
Sharon
B. Applegate,
III.D.(1),
available in
_________ __
733 PLI/Corp.
(complete subordination
of
Subordinated Loan
shall be
present
subordinated
and
as set
future extensions
Beverly National
Bank [or
forth in
this Section
of credit
its successors].
to
4 to
the Maker
. .
."
all
by The
See infra
___ _____
Appendix p.
expressly
i,
4.
the Subordinated
___ ____________
become or be
the
Senior Debt
payable .
_______
added).
against HTRA.
which
. . ."
See
___
becomes
_______
or is
__ __
infra Appendix
_____
Since there is no
declared to
________ __
p. ii,
4.4
be
__
due and
___ ___
(emphasis
to Bank of
court
correctly ruled
Thorn, Ltd.
that
HTRA's primary
loan obligation
to
has no
Thorn,
Ltd.
contends
that
subsection
4.4 does
not
____________________
6According to
Loan
Documents"
Note,
the
Agreement, and
other
7At
to the primary
not
debt.
"'[The
based
that
[he] would
of the note
with interest, if
to pay at maturity.'"
82, 83 (Mass.
D'Annolfo v.
_________
the common law rule here because the Guaranty is not inscribed on
the Note.
distinguished
Thorn,
from
Ltd. finds
its
rights
support
against HTRA
for this
under
contention in
the
Note.
subsection
4.5(a):
The
of
defining the
on
the
other
holders of Subordinated
none of
____ __
such provisions
____ __________
Debt on the
shall impair
_____ ______
of Subordinated Debt
of Senior Debt
such holder of
as
the
is unconditional and
__ _____________ ___
Subordinated Debt
the
the
___
terms
_____
prevent
any
holder
remedies
otherwise
terms of
such
thereof,
_______
nor shall
of Subordinated
permitted
Subordinated
by
Debt
upon
the rights,
___ ______
Section 4 of
_______ _ __
Thorn,
attempt
Guaranty
payments from
Ltd. had
by Thorn,
or
default
thereunder,
provisions of this
__________ __ ____
Thorn, Ltd.
light
of the
HTRA not
to payment
under the
provisions, interpreted in
4.5(a), reflected
to
provisions
exercising all
right
Debt from
such
applicable law
subject to
_______ __
of subsection
any
be
from HTRA;
Ltd. to proceed
jeopardized by
any right
and, further,
against Alletzhauser
that any
on the
priority payment,
nor undermine
recovery
disregard
terms.
HTRA's ability to
As this lawsuit
repay senior
only contemplates
to the April
In addition
to subsection 4.5(a),
Thorn, Ltd.
points
to induce
power
to control
Thorn,
meant
the
timing of
its
own recovery
from
HTRA.
to offset
schedule
its loss
which would
continue to
Thorn, Ltd.
of control
by prescribing
govern the
Ltd. and
a payment
ongoing repayment
Alletzhauser.
Otherwise,
the Guaranty.
tions,
we conclude
that neither
satisfactorily
reconciles the
the
present record.
with
the
The
Alletzhauser interpretation
comports
On the
____________________
8Indeed,
Guaranty
assets
permitting
would result
recovery
in
from
a corresponding
prior to repayment of
Alletzhauser
on
depletion of
the
HTRA's
fact that
the subordination
an occurrence.
9Thorn,
Ltd. does
not explain
why it
made no
attempt to
enforce its rights sooner despite the fact that HTRA had not made
a
See Rosen
___ _____
v.
no
indication as
to why
Thorn, Ltd.
would permit
owned.10
attended
Both parties
the drafting
represent that
of
the Note
and
place gives
a virtually
no longer
substantial negotiations
Guaranty.
Yet
their
as to their import.
Were
the
363
N.E.2d at
import
the
690 ("[W]hen
the parties.
a contract
guaranty's
terms
and
the
term is
ambiguous, its
intent as manifested by
circumstances
fail to reflect
surrounding
its
of
opment
forthcoming.
We
further proceedings
are convinced
nonetheless that
is appropriate here:
a remand
for
____________________
court's
extrinsic evidence
the
execution
may inform
of the
Guaranty.
an ambiguity determination.
First,
See
___
Robert Indus., Inc. v. Spence, 291 N.E.2d 407, 409 (Mass. 1973).
_______________ ____
______
Second, the court
of the
Guaranty itself
is
in conflict; there is
there is
no public policy
a much better
this
made
consideration to tip
prospect of
parties intended, if
resolving
an effort is
tions and the events that led up to and followed the Guaranty.
10
III
III
CONCLUSION
CONCLUSION
__________
Given the
unresolved conflict
in the language
of the
establish
relating
to
SO ORDERED.
SO ORDERED
__________
11
APPENDIX11
APPENDIX
________
1.
Payment.
_______
On each October 1
all
accrued
but
unpaid interest
on
the
outstanding
Date of Payment
_______________
Principal Payment
_________________
April 1, 1991
$25,000
October 1, 1991
$25,000
April 1, 1992
$25,000
October 1, 1992
$25,000
April 1, 1993
$37,500
October 1, 1993
$37,500
The entire
___ ______
accrued
remaining outstanding
but unpaid
______
interest
________
on, this
note
and all
___ ___
shall be
_____ __
due
___
and
___
. . . .
4.
Subordination.
_____________
Notwithstanding
_______________
of the
__ ___
. . agree
_____
as set forth in
__ ___ _____ __
future extensions
______ __________
of credit
__ ______
this Section 4
____ _______ _
to [HTRA]
__ ____
by The
__ ___
Debt shall
____ _____
be
__
Beverly National
_______ ________
4.2
Limitation
__________
on Payments.
__ ________
Payments of
interest
and
. . . So
__
long as any
____ __ ___
payment of principal or
_______ __ _________ __
interest
________
in accor__ ______
4.3
Payments
________
Held in
____ __
Trust.
_____
If, notwithstanding
the
any such
___ ____
set-off shall be held in trust by such holder of Subor_______ _____ __ ____ __ _____
Senior Debt
. . .
of Senior Debt . . .
__ ______ ____
to the payment
of all Senior
remaining unpaid until all such Senior Debt shall have been
____________________
emphasis in
been added.
the text of
the Note
have
paid in full.
4.4
Limitation
__________
on Enforcement.
__ ___________
holder of Subordinated
or provision to the
Debt
Documents.
. .
No
maturity of, or
holders of
institute pro-
any
any contrary
term
or
the date
Debt becomes or is
declared to be
4.5
Effect of
______ __
Provisions.
__________
Section 4 are
solely for
rights of the
holders of Senior
(a)
the purpose of
The provisions
of this
defining the
relative
Debt on the
impair
______
as between
__ _______
the
___
Maker [HTRA]
_____
the
of such
__ ____
and
___
any
___
obligation of the
__________ __ ___
_____
____
holder of
______ __
other amounts in
if any,
respect
provisions prevent
any
holder of
Subordinated Debt
from
under the terms of such Subordinated Debt upon a default thereunder, subject to the rights, if any, under
Section 4 of
that,
holders of Senior
Debt.
The
Maker hereby
agrees
is not permitted to
4,
ii