guarantor should only be held to strict terms of his guaranty
How later courts described this case
- guarantor should only be held to strict terms of his guaranty
Written by the judges who cited it.
The opinion
ACCEPTED
03-15-00506-CV
8341468
THIRD COURT OF APPEALS
AUSTIN, TEXAS
12/22/2015 11:57:23 AM
No. 03-15-00506-CV JEFFREY D. KYLE
CLERK
IN THE COURT OF APPEALS FILED IN
3rd COURT
FOR THE THIRD COURT OF APPEALS DISTRICT OF TEXAS OF APPEALS
AUSTIN, TEXAS
12/22/2015 11:57:23 AM
JEFFREY D. KYLE
EUGENE MILES PRENTICE, RICHARD M. SPAZIANO, Clerk and
CARL WILLIAM POLLOCK,
Appellants,
vs.
FROST BANK,
Appellees.
On appeal from the 200th District Court of Travis County, Texas
Docket No. D-1-GN-13-000711
APPELLANTS’ BRIEF
PENDERGRAFT & SIMON, L.L.P. CARL WILLIAM POLLOCK
Robert L. Pendergraft 1200 Barton Creek Blvd. #3
Texas Bar No. 15743500 Austin, TX 78735
William P. Haddock Tel. 512-656-6374
Texas Bar No. 00793875
2777 Allen Parkway, Suite 800 Appellant, Pro Se
Houston, TX 77019
Tel. 713-528-8555
Fax. 713-868-1267
Counsel for Eugene Miles Prentice &
Richard M. Spaziano
ORAL ARGUMENT REQUESTED
Identity of Parties & Counsel
Appellants: Counsel:
Eugene Miles Prentice William P. Haddock
Robert L. Pendergraft
Pendergraft & Simon, LLP
2777 Allen Parkway, Suite 800
Houston, TX 77019
Richard M. Spaziano William P. Haddock
Robert L. Pendergraft
Pendergraft & Simon, LLP
2777 Allen Parkway, Suite 800
Houston, TX 77019
Carl William Pollock Pro se
1200 Barton Creek Blvd. #3
Austin, TX 78735
Appellee: Counsel:
Frost Bank Kendall D. Hamilton
Law Office of Ken Hamilton
900 RR 620 South
Suite C101 #164
Austin, TX 78734
i
Statement Regarding Oral Argument
The Appellant believes an oral argument would aid the Court in determin-
ing the legal and factual issues presented in this appeal because:
a. This case involves legal issues regarding the interpretation of
multiple guaranty agreements have not been definitively de-
cided by the Supreme Court of Texas or by this Court.
b. As described in this brief, the decisional process of this Court
may be significantly aided by oral argument.
ii
Table of Contents
Identity of Parties & Counsel .............................................................................. i
Statement Regarding Oral Argument ...............................................................ii
Index of Authorities ............................................................................................. v
Statement of the Case ........................................................................................... 1
Statement of Jurisdiction ..................................................................................... 2
Issues Presented .................................................................................................... 3
Statement of Facts ................................................................................................. 4
A. The Underlying Promissory Note & Guaranty
Agreements.............................................................................................. 4
B. Default & Initial Demands on the Guarantors ................................... 6
C. Settlement with Bruce Ling & Other Payments to Frost
Bank .......................................................................................................... 6
D. Frost Bank Files Suit Against the Remaining
Guarantors ............................................................................................... 7
Summary of the Argument ................................................................................. 9
Argument .............................................................................................................. 11
I. The trial court erred in granting a no-evidence summary
judgment on a claim in which Frost Bank had the burden of
proof ............................................................................................................... 12
II. The trial court erred in granting a traditional summary
judgment where latent ambiguities required strict
construction in favor of the Guarantors .................................................... 14
A. Unambiguous language in the Guaranty Agreements
must be interpreted by its plan language as a matter of
law........................................................................................................... 18
iii
B. Latent ambiguities arising from the reading of the
Guaranty Agreements together require construction in
the Guarantors’ favor ........................................................................... 19
C. The Court must resolve ambiguities in the Guaranty
Agreements in favor of the Guarantors ............................................ 22
III. The trial court erred in denying Appellants’ Cross-Motion
for Summary Judgment ............................................................................... 25
Conclusion & Prayer........................................................................................... 25
Certificate of Compliance.................................................................................. 27
Certificate of Service .......................................................................................... 27
Appendix .............................................................................................................. 28
iv
Index of Authorities
Cases
Board of Ins. Comm’rs v. Great S. Life Ins. Co.,
239 S.W.2d 803 (Tex. 1951) ........................................................................... 19
Bromlow v. Pyne Corp.,
490 So.2d 1027 (Fla.Dist.Ct.App. 1986) ....................................................... 20
Coker v. Coker,
650 S.W.2d 391 (Tex. 1983) ............................................................... 16, 17, 22
DeWitt County Elec. Co-op., Inc. v. Parks,
1 S.W.3d 96 (Tex. 1999) ................................................................................. 19
FM Properties Operating Co. v. City of Austin,
22 S.W.3d 868 (Tex. 2000) ....................................................................... 11, 25
Gulf Ins. Co. v. Burns Motors, Inc.,
22 S.W.3d 417 (Tex. 2000) ............................................................................. 17
Heritage Res. Inc. v. NationsBank,
939 S.W.2d 118 (Tex. 1996) ........................................................................... 17
Hill Mercantile Co. v. Rotan Grocery Co.,
127 S.W. 1080 (Tex.Civ.App.—Austin 1910, writ dism’d) ................. 16, 22
In re Prudential Ins. Co. of America,
148 S.W.3d 124 (Tex. 2004) (orig. proceeding) ........................................... 17
JMW Partners, L.P. v. Northstar Bank of Texas,
No. 2-09-167-CV, 2010 WL 2331399 (Tex.App.—Fort Worth
Jun. 10, 2010, no pet.) (mem. op.) .............................................. 17, 22, 23, 24
Lear Siegler, Inc. v. Perez,
819 S.W.2d 470 (Tex. 1991) ........................................................................... 15
Limestone Products Distrib., Inc. v. McNamara,
71 S.W.3d 308 (Tex. 2002) ............................................................................. 14
Mack Trucks, Inc. v. Tamez,
206 S.W.3d 572 (Tex. 2006) ........................................................................... 13
v
Masterson v. Diocese of Northwest Texas,
422 S.W.3d 594 (Tex. 2013) ........................................................................... 11
McCrea v. Cubilla Condo. Corp. N.V.,
685 S.W.2d 755 (Tex.App.—Houston [1st Dist.] 1985, writ
ref’d n.r.e.)....................................................................................................... 11
National Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc.,
907 S.W.2d 517 (Tex. 1995) ........................................................................... 19
Nixon v. Mr. Prop. Mgmt. Co.,
690 S.W.2d 546 (Tex. 1985) ........................................................................... 14
Pham v. Mongiello,
58 S.W.3d 284 (Tex.App.—Austin 2001, pet. denied) ............................... 15
Principal Commercial Acceptance, L.L.C. v. Buchanan Fund V,
L.L.C., No. 01-11-00782-CV, 2012 WL 6095236 (Tex.App.—
Houston [1st Dist.] Dec. 6, 2012, pet. denied) (mem. op.)........................ 17
Progressive Cnty. Mut. Ins. Co. v. Kelley,
284 S.W.3d 805 (Tex. 2009) ........................................................................... 17
Rhône-Poulenc, Inc. v. Steel,
997 S.W.2d 217 (Tex. 1999) ........................................................................... 14
Scott v. City of Tampa,
30 So.2d 300 (Fla. 1947), cert. denied, 332 U.S. 790 (1947) .......................... 20
Sidelnik v. American States Ins. Co.,
914 S.W.2d 689 (Tex.App.—Austin 1996, writ denied) ............................ 14
Smith v. Montgomery,
3 Tex. 199 (1848) ............................................................................................. 16
Stone v. Midland Multifamily Equity REIT,
334 S.W.3d 371 (Tex.App.—Dallas 2011, no pet.) ..................................... 15
Walker v. Harris,
924 S.W.2d 375 (Tex. 1996) ........................................................................... 15
Whitney Nat’l Bank v. Labry,
No. 09-cv-02518, 2011 WL 1211606 (W.D. Tenn. Mar. 29,
2011) (not designated for publication) .................................................. 20, 21
vi
Statutes
Tex. Gov’t Code Ann. § 22.220 (West Supp. 2014) ............................................ 2
Rules
Tex. R. Civ. P. 166a ............................................................................................... 13
vii
TO THE HONORABLE JUSTICES OF THIS COURT:
Eugene Miles Prentice, Richard M. Spaziano, and Carl William Pollock
respectfully submit this Appellants’ Brief showing the Court why the lower
court erred in its interpretation of the law leading to the improper entry of
a summary judgment in favor of Frost Bank on its sole cause of action for
breach of a guaranty agreement and in denying the Appellants’ cross-
motions for summary judgment. In support, the Appellants respectfully
show:
Statement of the Case
Nature of the Case Frost Bank filed suit against Eugene Miles Prentice,
Richard M. Spaziano, and Carl William Pollock for
breach of separate, but essentially identical, guaranty
agreements guaranteeing 50 percent of the indebted-
ness owed by National Insurance Partners. (C.R. 3–8).
The Appellants answered and pled affirmative de-
fenses. (C.R. 38–39, 195–96).
Trial Court While originally assigned to the 126th District Court
of Travis County, Texas the final order being ap-
pealed was entered by the 200th District Court of
Travis County, Texas, the Honorable Giesela D. Tria-
na presiding.
Trial Court After hearing Frost Bank’s motion for summary
Disposition judgment and Appellants’ cross-motion for summary
judgment, on August 5, 2015, the court entered a final
summary judgment finding the Appellants liable un-
der the guaranty agreements and holding each Ap-
pellants personally liable for up to $360,471.60 until
the total underlying indebtedness is paid. (C.R. 507–
09; App. 1).
1
Appellate On August 12, 2015, the Appellants perfected an ap-
Proceedings peal to this Court. (C.R. 512).
Statement of Jurisdiction
This Court has jurisdiction over the final, summary judgment pursuant
to Tex. Gov’t Code Ann. § 22.220(a) (West Supp. 2014).
Following the entry of the final, summary judgment on August 5, 2015,
this appeal was perfected on August 12, 2015. (C.R. 512).
2
Issues Presented
1. Whether the trial court erred in granting a no-evidence motion
for summary judgment on the basis that the parties defending a
plaintiff’s cause of action, where the plaintiff had the burden of
proof, allegedly did not have more than a scintilla of evidence
to defeat the movant’s cause of action.
2. Whether the trial court erred in determining that four, substan-
tially identical guaranty agreements, when read together did
not contain a latent ambiguity.
3. Whether the trial court erred by denying the Appellants’ cross-
motion for summary judgment asserting that the Appellee
could not prevail in its cause of action for breach of a guaranty
agreement.
3
Statement of Facts
The facts of this case are not in dispute; this case involves legal matters
only and the application of law to the undisputed facts.
A. The Underlying Promissory Note & Guaranty Agreements
In exchange for a loan, National Insurance Partners, Inc. (“NIP”) exe-
cuted a promissory note, dated May 22, 2007, in the amount of $1 million.
(C.R. 225, 229, 233, 237). On October 16, 2009, a new promissory note paya-
ble to Frost Bank, in the amount of $1,292,000, was executed as part of a
modification of the original loan agreement. (C.R. 215, 219–21).
As a condition of making the original loan, the bank required guaranty
agreements to be made by NIP’s principal officer, Appellant, Carl William
Pollock, and three other individuals who were neither officers, directors,
nor employees of NIP:
1. Bruce W. Ling,
2. Appellant, Eugene Miles Prentice, and
3. Appellant, Richard M. Spaziano.
(C.R. 215).
The guaranty agreements, all of which were dated May 22, 2007, were
identical except for the identity of the respective guarantors. (C.R. 215, 223–
38). The guaranty agreements provide, in relevant part:
4
Guarantor absolutely and unconditionally guarantees full and
punctual payment and satisfaction of Guarantor’s Share of the In-
debtedness of Borrower to Lender. . . .
If Lender presently holds one or more guarantees, or hereafter
receives additional guarantees from Guarantor, Lender’s rights
under all guaranties shall be cumulative. This Guaranty shall
not (unless specifically provided below to the contrary) affect or
invalidate any such other guaranties. Guarantor’s liability will
be Guarantor’s aggregate liability under the terms of this Guar-
anty and any such other unterminated guaranties. . . .
The words “Guarantor’s Share of the Indebtedness” . . . mean
50.000% of all of the principal amount, interest thereon to the
extent not prohibited by law, and all collection costs, expenses
and Lender’s reasonable attorneys’ fees whether or not there is
a lawsuit, and if there is a lawsuit, any fees and costs for trial
and appeals. . . .
In all cases where there is more than one . . . Guarantor, then all
words used in this Guaranty in the singular shall be deemed to
have been used in the plural where the context and construc-
tion so requires.
(C.R. 223–38) (emphasis added).
The guaranty agreements defined “the Note” as:
[T]he promissory note dated May 22, 2007, in the original prin-
cipal amount of $1,000,000.00 from Borrower to Lender, togeth-
er with all renewals of, extensions of, modifications of,
refinancings of, consolidations, of and substitutions for the
promissory note or agreement.
(C.R. 225–26, 229–30, 233–34, 237–38).1
1
True and correct copies of the guaranty agreements were submitted as summary
judgment evidence by the parties, and they appear at various places in the Clerk’s Rec-
ord as follows:
5
B. Default & Initial Demands on the Guarantors
It is undisputed that NIP failed to pay its indebtedness to Frost Bank
before it became a debtor in bankruptcy. (C.R. 215). As a result, on, or
about, October 22, 2012, the the bank made demand on Pollock, Ling, Pren-
tice, and Spaziano for payment of $712,554.68. (C.R. 215, 240–47).
C. Settlement with Bruce Ling & Other Payments to Frost Bank
On, or about, December 19, 2012, the Frost Bank and Ling entered into a
settlement agreement where Ling paid the bank $358,684.32 in exchange
for a full release of his personal liability. (C.R. 216, 481, 488–90). This pay-
ment was 50 percent of the indebtedness identified in Frost Bank’s de-
mands plus accrued interest through the time of the settlement agreement.
Between the time Frost Bank ultimately filed its lawsuit and the time it
filed its motion for summary judgment, the bankruptcy trustee administer-
ing NIP’s bankruptcy estate was able to pay Frost Bank $66,281.49 out of
the assets on hand. (C.R. 216).
Guaranty Frost MSJ Appellants’ Cross-MSJ
Agreement Motion Response Motion Response
Prentice C.R. 227–30 C.R. 367–70 C.R. 312–15 C.R. 470–73
Spaziano 235–38 373–76 318–21 476–79
Pollock 231–34 388–91 333–36 491–94
Ling 223–26 379–82 324–27 482–85
6
D. Frost Bank Files Suit Against the Remaining Guarantors
Despite having received approximately 50 percent of the indebtedness
owed by NIP, Frost Bank filed suit to collect additional monies from the
remaining three guarantors—Prentice, Spaziano, and Pollock. (C.R. 3–8).
On March 19, 2014, Prentice and Spaziano filed a motion for summary
judgment. (C.R. 41–85). The Motion was heard by a Visiting Judge, the
Honorable Charles Ramsay, and on May 18, 2014, he entered an Order
denying the motion. (C.R. 197).
On April 20, 2015, Frost Bank filed its own motion for summary judg-
ment on both traditional and no-evidence grounds. (C.R. 201–95). Prentice,
Spaziano, and Pollock filed a response on June 15, 2015. (C.R. 454–99). A
hearing was held June 22, 2015. (C.R. 502).
In conjunction with Frost Bank’s motion for summary judgment, Pren-
tice, Spaziano, and Pollock field a cross-motion for summary judgment on
June 1, 2015. (C.R. 296–341). Frost Bank filed a timely response on June 12,
2015. (C.R. 346–453). The arguments Frost Bank raised in its motion for
summary judgment were essentially the same arguments raised in its re-
sponse to Appellant’s cross-motion for summary judgment; likewise, the
arguments raised in Appellant’s cross-motion for summary judgment were
essentially identical to the arguments made in response to Frost Bank’s mo-
tion for summary judgment. Whether filed in the motion for summary
7
judgment, the cross-motion, or in any response, there were no objections to
any summary judgment evidence, and none of the summary judgment ev-
idence raised any issue of material fact. The parties agreed that the issue
before the trial court merely involved the application of undisputed facts to
the law.
The motion for summary judgment and the cross-motion for summary
judgment were heard June 22, 2015. (C.R. 502). On June 24, 2015, the Judge
Triana announced her ruling on the two motions and asked Frost Bank’s
counsel to draft a final summary judgment in conformity with her ruling.
(C.R. 502).
On July 30, the Appellants again requested that the court make a ruling
expressly denying Frost Bank’s no-evidence motion for summary judg-
ment.2 (C.R. 503–06).
On August 5, 2015, the Court entered the final summary judgment.
(C.R. 507–10; App. 1). A week later, Prentice, Spaziano, and Pollock filed
their Notice of Appeal. (C.R. 512–17).
2
This request for a ruling was made when Frost Bank would not agree to language in
the proposed summary judgment that would deny the no-evidence portion of Frost
Bank’s motion.
8
Summary of the Argument
The trial court heard a motion for summary judgment and a cross-
motion for summary judgment. In its motion for summary judgment, Frost
Bank urged the court to grant a summary judgment on its sole cause of ac-
tion for breach of a guaranty agreement on both traditional and no-
evidence grounds. In their cross-motion for summary judgment, the Appel-
lants urged the court to deny Frost Bank’s claims due to latent ambiguities
in the guaranty agreements.
While not specifying the grounds for granting the summary judgment,
the trial court should most certainly have denied the no-evidence motion
for summary judgment because it amounted to an improper shifting of the
burden of proof to the Appellants. Guarantors never have the burden of
proof on a cause of action for breach of a guaranty agreement. The only
way Frost Bank could have properly moved for a no-evidence summary
judgment would be to do so on an affirmative defense, but this was not
done.
Under well-settled Texas law, guaranty agreements are construed in
favor of the guarantor. When the guaranty agreement is unambiguous, the
Court must interpret the agreement as a matter of law using established
principles of contract construction. When a guaranty agreement contains
patent or latent ambiguities, no parol evidence can be used to determine
9
the parties’ intent unless those ambiguities are resolved in the guarantors’
favor.
When read together, the guaranty agreements, which were executed at
the same time and involve the same subject matter, contain a patent ambi-
guity. In each individual guaranty agreement, Bruce Ling, Miles Prentice,
Richard Spaziano, and William Pollock agreed to guarantee half of the in-
debtedness National Insurance Partners owed to Frost Bank. The guaranty
agreements stated:
In all cases where there is more than one . . . Guarantor, then all
words used in this Guaranty in the singular shall be deemed to
have been used in the plural where the context and construc-
tion so requires.
Applying that clause to the guaranty agreements, this literally means:
[Guarantors] absolutely and unconditionally guarantee full and
punctual payment and satisfaction of [Guarantors’] Share of
the Indebtedness of Borrower to Lender. . . .
The words “[Guarantors’] Share of the Indebtedness” . . . mean
50.000% of all of the principal amount, interest thereon to the
extent not prohibited by law, and all collection costs, expenses
and Lender’s reasonable attorneys’ fees whether or not there is
a lawsuit, and if there is a lawsuit, any fees and costs for trial
and appeals.
Given that guaranty agreements are strictly construed in favor of guar-
antors, the Court should reverse the summary judgment and render the
judgment that the trial court should have entered. A remand would be fu-
tile as no amount of parol evidence of the parties’ intent can salvage Frost
10
Bank’s claims that it should recover from the four Guarantors any more
than 50 percent of the indebtedness due from National Insurance Partners.
Argument
The lower court erred in entering a summary judgment in favor of Frost
Bank and in denying the cross-motion for summary judgment filed by the
Appellants. The Court should review the granting of a summary judgment
de novo. E.g., Masterson v. Diocese of Northwest Texas, 422 S.W.3d 594, 607
(Tex. 2013).
As stated in FM Properties Operating Co. v. City of Austin:
When both sides move for summary judgment and the trial
court grants one motion and denies the other, the reviewing
court should review both sides’ summary judgment evidence
and determine all questions presented. . . . The reviewing court
should render the judgment that the trial court should have
rendered. . . . When a trial court’s order granting summary
judgment does not specify the grounds relied upon, the review-
ing court must affirm summary judgment if any of the sum-
mary judgment grounds are meritorious.
22 S.W.3d 868, 872 (Tex. 2000) (internal citations omitted).
Because the summary judgment does not state the grounds on which it
was granted, the Appellants demonstrate herein that each ground alleged
in the motion is insufficient to support the judgment. See McCrea v. Cubilla
Condo. Corp. N.V., 685 S.W.2d 755, 757 (Tex.App.—Houston [1st Dist.] 1985,
writ ref’d n.r.e.).
11
Frost Bank alleged it was entitled to summary judgment on both tradi-
tional and no-evidence grounds. On its traditional motion for summary
judgment, Frost Bank had to prove that it was entitled to a judgment be-
cause it could prove, as a matter of law, each and every element of its claim
for breach of a guaranty agreement. As to the no-evidence portion of the
motion for summary judgment, Frost Bank’s arguments were meritless,
and the trial court should have never considered them.
I.
The trial court erred in granting a no-evidence summary
judgment on a claim in which Frost Bank had the burden of
proof
The trial court erred by not sustaining Appellants’ objection to a no-
evidence motion for summary judgment and not otherwise denying sum-
mary judgment, where Frost Bank alleged:
Frost hereby alleges that it is entitled to no-evidence summary
judgment as to the liability of each of the Defendants to pay
Frost their Guarantor’s Share of the Indebtedness, pursuant to
the terms of their respective Guaranty Agreement, until the
principal, interest, and costs of collection occurred in regard to
the underlying Note have been paid full, on the grounds that
Defendants are unable to present more than a scintilla of evi-
dence that Frost cannot establish all necessary elements of its
claim to enforce the Guaranty Agreements.
(C.R. 212).
This is an improper use of a no-evidence motion for summary judg-
ment. There is no conceivable way Frost Bank could be granted a summary
12
judgment on no-evidence grounds on its own cause of action where it had
the burden of proof. See Tex. R. Civ. P. 166a(i) (“a party without presenting
summary judgment evidence may move for summary judgment on the
ground that there is no evidence . . . on which an adverse party would have
the burden of proof at trial.”); see also App. 6.
A no-evidence motion for summary is the equivalent of a pre-trial di-
rected verdict. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581–82 (Tex.
2006). The filing of a no-evidence motion that complies with Rule 166a(i)
shifts the burden to the non-movant to file more than a scintilla of evi-
dence, showing there is a genuine issue of material fact as to the challenged
elements of the non-movant’s cause of action or affirmative defense that is
being challenged. See id.
By moving for a no-evidence motion for summary judgment on its own
cause of action, Frost Bank improperly shifted the burden of proof in the
entire case to the Appellants. The Appellants should no more have had the
burden of proof on the Frost Bank’s case in a summary judgment proceed-
ing than they would have at a trial on the merits.
13
II.
The trial court erred in granting a traditional summary judgment
where latent ambiguities required strict construction in favor of
the Guarantors
Latent ambiguities in the guaranty agreements, which are evident when
the agreements are read together, are an absolute bar to Frost Bank obtain-
ing a summary judgment. When a latent ambiguity exists, a fact issue ex-
ists. See Sidelnik v. American States Ins. Co., 914 S.W.2d 689, 691–92 (Tex.
App.—Austin 1996, writ denied) (in resolving patent ambiguities, parol ev-
idence is admissible).
In deciding whether there is a disputed issue of material fact that pre-
cludes summary judgment, the Court should consider as true all evidence
favorable to the nonmovant. Limestone Products Distrib., Inc. v. McNamara,
71 S.W.3d 308, 311 (Tex. 2002); Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217,
223 (Tex. 1999); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex.
1985). The Court must view the evidence in the light most favorable to the
nonmovant and must indulge every reasonable inference and resolve all
doubts in favor of the nonmovant. Limestone Prods., 71 S.W.3d at 311; Nixon,
690 S.W.2d at 549.
To establish liability under a guaranty agreement, the holder of the
guaranty must prove:
1. The existence and ownership of the guaranty,
14
2. The performance of the terms of the underlying loan agreement
by the holder,
3. The occurrence of the condition upon which liability is based,
and
4. The guarantor’s failure or refusal to perform the promise.
E.g., Stone v. Midland Multifamily Equity REIT, 334 S.W.3d 371, 378 (Tex.
App.—Dallas 2011, no pet.). If liability is proved, the amount of liability is
measured by the principal’s liability, unless the guaranty agreement ex-
pressly provides for greater or lesser liability. Pham v. Mongiello, 58 S.W.3d
284, 288 (Tex.App.—Austin 2001, pet. denied). In the present case, the
Guarantors’ liability was limited to 50 percent of the total indebtedness due
to the bank. (C.R. 223–38).
Because the amount of liability is an essential element, to be entitled to
a summary judgment, the Appellants only need to disprove a single ele-
ment of Frost Bank’s claims—in this case the amount of liability. Walker v.
Harris, 924 S.W.2d 375, 378 (Tex. 1996); Lear Siegler, Inc. v. Perez, 819 S.W.2d
470, 471 (Tex. 1991).
The determinative question involving the four, identical guaranty
agreements is whether each guarantor personally guaranteed 50 percent of
the total indebtedness, making all guarantors collectively liable for up to
200 percent of all indebtedness that might be due, or whether all guaran-
tors are collectively liable for only 50 percent of the total indebtedness. If
15
the former is true, each Appellant in this case would be liable for
$360,471.60 as set forth in the underlying summary judgment. (C.R. 508–09;
see also App. 1). If the latter is true, the Appellants would be collectively li-
able for $356,277.34 of the indebtedness that was due on October 22, 2012,
and since Ling previously paid the same amount to settle the Frost Bank’s
claim, the Appellants’ liability should have been $0.
As shown herein, the latter scenario—where the Appellants should
have no liability to Frost Bank—is the proper one because it is fundamental
that ambiguities in guaranty agreements are strictly construed in favor of
guarantors. E.g., Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983). This has
been the fundamental principal of the law involving guaranty agreements
in Texas since the mid-19th century. Smith v. Montgomery, 3 Tex. 199, 209
(1848);3 see also Hill Mercantile Co. v. Rotan Grocery Co., 127 S.W. 1080, 1082
(Tex.Civ.App.—Austin 1910, writ dism’d) (“It is a well-settled rule of law
that contracts of guaranty and suretyship are to be strictly construed, and
all reasonable doubts resolved in favor of the guarantor or surety.”).
3
Justice Wheeler wrote, “It is a well settled rule, applicable to this class of cases, that the
liability of a guarantor or surety cannot be extended by implication, or otherwise, be-
yond the actual terms of his engagement. It does not matter that a proposed alteration
would even be for his benefit; for he has a right to stand upon the very terms of his
agreement. The case must be brought strictly within the terms of the guaranty, when
reasonably interpreted, or the guarantor will not be liable.” Smith v. Montgomery, 3 Tex.
199, 209 (1848).
16
This is especially true where the ordinary rules of contract interpreta-
tion render the parties’ obligations uncertain or ambiguous. Principal Com-
mercial Acceptance, L.L.C. v. Buchanan Fund V, L.L.C., No. 01-11-00782-CV,
2012 WL 6095236, at *8 (Tex.App.—Houston [1st Dist.] Dec. 6, 2012, pet.
denied) (mem. op.) (citing Coker, 650 S.W.2d at 393 n. 1); JMW Partners, L.P.
v. Northstar Bank of Texas, No. 2-09-167-CV, 2010 WL 2331399, at *4 (Tex.
App.—Fort Worth Jun. 10, 2010, no pet.) (mem. op.) (citing Coker, 650
S.W.2d at 393 n. 1).
The interpretation of a guaranty agreement is a question of law. Gulf
Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000). Where multiple
guarantees were executed at the same time, with the same purpose, they
are construed together. In re Prudential Ins. Co. of America, 148 S.W.3d 124,
135 (Tex. 2004) (orig. proceeding). In construing guaranty agreements, the
primary concern is to ascertain the intent of the parties. Coker, 650 S.W.2d at
393. The inquiry into the parties’ intent must begin with the express lan-
guage of the contract. Progressive Cnty. Mut. Ins. Co. v. Kelley, 284 S.W.3d
805, 807 (Tex. 2009). The entire document should be considered, each part
with every other part so that the effect and meaning of one part on any
other part may be determined. Heritage Res. Inc. v. NationsBank, 939 S.W.2d
118, 121 (Tex. 1996).
17
A. Unambiguous language in the Guaranty Agreements must be
interpreted by its plan language as a matter of law
The language of the applicable clauses of the guaranty agreements is
quoted on Page 5 of this Brief, and copies of the guaranty agreements are
behind Tabs 2 through 5 of the Appendix. One of the key paragraphs of the
guaranty agreements—labeled “Interpretation”—states:
In all cases where there is more than one . . . Guarantor, then all
words used in this Guaranty in the singular shall be deemed to
have been used in the plural where the context and construc-
tion so requires.
(C.R. 225, 229, 233, 237) (emphasis added).
Applying this provision to the definition of the guarantors’ liability, the
plain language means that, collectively, the Appellants should not be liable
for more than 50 percent of the total indebtedness due to the bank:
[Guarantors] absolutely and unconditionally guarantee full and
punctual payment and satisfaction of [Guarantors’] Share of
the Indebtedness of Borrower to Lender. . . .
The words “[Guarantors’] Share of the Indebtedness” . . . mean
50.000% of all of the principal amount, interest thereon to the
extent not prohibited by law, and all collection costs, expenses
and Lender’s reasonable attorneys’ fees whether or not there is
a lawsuit, and if there is a lawsuit, any fees and costs for trial
and appeals.
(C.R. 223, 227, 231, 235) (emphasis added, bracketed words re-
flecting the presence of multiple guarantors per clause regard-
ing “interpretation”).
Looking at the plan language of the guaranty agreements, Guarantors’
Share of the Indebtedness refers to all of the guarantors, collectively. The four
18
documents should be considered as a single guaranty contract. “Under
generally accepted principles of contract interpretation, all writings that
pertain to the same transaction will be considered together, even if they
were executed at different times and do not expressly refer to one another.”
DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 102 (Tex. 1999) (citing
Board of Ins. Comm’rs v. Great S. Life Ins. Co., 239 S.W.2d 803, 809 (Tex.
1951)).
The plain language of the guaranty agreements should be the end of the
Court’s inquiry. This is because, as shown below, if the Court finds that the
language is ambiguous, any such ambiguities must be resolved in the
guarantors’ favor.
B. Latent ambiguities arising from the reading of the Guaranty
Agreements together require construction in the Guarantors’ favor
An ambiguity in a contract may be patent or latent. National Union Fire
Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995).
A patent ambiguity is apparent on the face of the contract, but a latent am-
biguity only becomes apparent when a facially unambiguous contract is
applied under the circumstances. Id. The present case is on where a single
guaranty agreement becomes ambiguous when interpreting the meaning of
Guarantors’ Share of the Indebtedness in light of four, identical guaranty
agreements guaranteeing payment of the same debt.
19
The fundamental question is whether Guarantors’ Share of the Indebted-
ness means 50 percent of the entire indebtedness owed by NIP owned by
the four guarantors collectively, or whether each individual guarantor is
individually liable for 50 percent of the indebtedness, making the four
guarantors mathematically liable for up to 200 percent of the indebtedness.
No reported decision in Texas has addressed the fundamental question
presented in this case. However, the issue was examined in a federal dis-
trict court in Tennessee, in a diversity case involving Florida law. Whitney
Nat’l Bank v. Labry, No. 09-cv-02518, 2011 WL 1211606 (W.D. Tenn. Mar. 29,
2011) (not designated for publication). As in Texas, guaranty agreements
governed by Florida law are strictly construed in favor of guarantors. Scott
v. City of Tampa, 30 So.2d 300, 302 (Fla. 1947), cert. denied, 332 U.S. 790
(1947); see also Bromlow v. Pyne Corp., 490 So.2d 1027, 1029 (Fla.Dist.Ct.App.
1986) (guarantor should only be held to strict terms of his guaranty).
As in the present case, each promissory note in Labry was guaranteed
by four identical guarantees. Labry, 2011 WL 1211606 at *3. The language of
the guaranty agreement, addressing multiple guarantors, in Labry was also
similar to that in the present case as shown below:
This space intentionally left blank
20
Labry Present Case
If this Guaranty is executed by more In all cases where there is more than
than one person, each person is one . . . Guarantor, then all words
bound by all of the provisions of this used in this Guaranty in the singular
Guaranty and is jointly and several- shall be deemed to have been used
ly liable for the payment in full of in the plural where the context and
the Obligations up to the full construction so requires.
amount of this Guaranty as if such
person was the only person execut-
ing this Guaranty.
Labry, 2011 WL 1211606 at *7–*8. (C.R. 225, 229, 233, 237; see also App.
2–5).
Both Labry and the present case are similar because none of the contrac-
tual provisions called for multiplying the amount the guarantors would be
collectively liable for just because there were multiple guarantors. Labry
found the argument that the guarantors were collectively responsible for
paying multiple guarantees to be untenable. Labry, 2011 WL 1211606 at *11.
This was based upon an examination of the plain language of the identical
guaranty agreements. See id. at *9–*10.
Moreover, in determining the context of the scope of the “interpreta-
tion” clause dealing with multiple guaranty agreements, where the plural
form of singular words is used “where the context and construction so re-
quires,” the Court should not just choose an interpretation the paragraph
defining guarantors’ share of the indebtedness must always be defined in the
singular, even when multiple guaranty agreements exist.
21
C. The Court must resolve ambiguities in the Guaranty Agreements in
favor of the Guarantors
Even if the Court finds that the ambiguities exist that require determin-
ing the parties’ intent so that the meaning of the guaranty agreements may
be construed—in the guarantor’s favor, of course—the Court can arrive at
no other conclusion that the guarantee agreements cannot be multiplied in
order to allow the Frost Bank to recover more than 50 percent of the in-
debtedness from the Appellants. See e.g., Coker, 650 S.W.2d at 394; Hill Mer-
cantile Co., 127 S.W. at 1082 (guaranty agreements are strictly construed in
the guarantor’s favor).
An example of ambiguity arising with the execution multiple guaranty
agreements is illustrated in JMW Partners, L.P. v. Northstar Bank of Texas.
No. 2-09-167-CV, 2010 WL 2331399 (Tex.App.—Fort Worth Jun. 10, 2010, no
pet.) (mem. op.). However, the ambiguity in JMW Parners involved wheth-
er guaranty agreements guaranteeing payment of a second loan extended
to the indebtedness from an earlier loan with separate guaranty agree-
ments. Id. at *1–*2. Nonetheless, JMW Parners is still instructive to the pre-
sent case.
In JMW Partners, two guarantors, jointly and severally, guaranteed 100
percent of a $162,500 debt owed to Northstar Bank. Id. at *1. Two years lat-
er they guaranteed a second promissory note to Northstar Bank made by
22
the same debtor, but the second guarantee limited their liability to ⅓ of the
outstanding indebtedness. Id. at *2. In the second guarantee, the Guarantor’s
share of the indebtedness was defined as:
The words “Guarantor’s Share of the Indebtedness” as used in
this Guaranty mean 33.330% of the principal amount of the In-
debtedness that is outstanding from time to time and at any one
or more times. ‘Guarantor’s Share of the Indebtedness' also in-
cludes all accrued unpaid interest on the Indebtedness and all
collection costs, expenses, and Lender’s reasonable attorneys’
fees. . . .”
Id.
The Court found that neither guaranty agreement by itself was ambig-
uous. Rather ambiguity was found to exist, warranting a remand to the tri-
al court, because the Court was unable to determine whether the parties
intended the second guaranty agreement to apply to the original indebted-
ness. Id. at *7.
Most importantly, the definition of Guarantor’s share of indebtedness was
substantially identical to the same definition in this case:
This space intentionally left blank
23
JMW Partners Present Case
The words “Guarantor’s Share of The words “Guarantor’s Share of
the Indebtedness” . . . mean the Indebtedness” . . . mean 50.000%
33.330% of the principal amount of of all of the principal amount, inter-
the Indebtedness that is outstanding est thereon to the extent not prohib-
from time to time and at any one or ited by law, and all collection costs,
more times. ‘Guarantor’s Share of expenses and Lender’s reasonable
the Indebtedness' also includes all attorneys’ fees whether or not there
accrued unpaid interest on the In- is a lawsuit, and if there is a lawsuit,
debtedness and all collection costs, any fees and costs for trial and ap-
expenses, and Lender’s reasonable peals. . . .
attorneys’ fees. . . .
JMW Partners, 2010 WL 2331399 at (C.R. 223, 227, 231, 235; see also App.
*2. 2–5).
The Court in JMW Partners, did not find its substantially similar definition
of guarantor’s share of indebtedness to allow the multiplication of the guaran-
tors’ individual liability beyond ⅓ of the indebtedness. See id. at *7. The in-
terpretation of the second guaranty agreement in JMW Partners was based
upon an examination of the plain language. While it is unclear whether the
the guaranty agreements in JMW Partners had the same “interpretation”
clause as in the present case, there was no attempt to make the guarantors
liable for more than ⅓ of the indebtedness. Id. at *7.
Accordingly, the lower court erred when it did not limit guarantors’
collective liability to 50 percent of the indebtedness due to Frost Bank.
24
III.
The trial court erred in denying Appellants’ Cross-Motion for
Summary Judgment
Just as the lower court erred in granting Frost Bank’s motion for sum-
mary judgment, the same factors set forth in Section II, above, demonstrate
that the lower court erred when it denied the Appellants’ cross-motion for
summary judgment. Accordingly, the this Court should reverse the sum-
mary judgment and render a new judgment holding that Frost Bank should
take nothing by way of its claims against the Appellants. See FM Properties
Operating Co., 22 S.W.3d at 872.
No amount of fact finding by the lower court can result in the refor-
mation of the guaranty agreements in this case to allow Frost Bank to re-
cover more than 50 percent of the indebtedness from the four guarantors.
Conclusion & Prayer
The latent ambiguity created in the four guaranty agreements must be
resolved in the Appellants’ favor. The definition of guarantor’s share of the
indebtedness should not have separate meanings for when there is a single
guaranty agreement versus multiple guaranty agreements.
25
Being that there are no material facts in dispute, the Court may proper-
ly reverse and render a judgment on the grounds raised in the cross-motion
for summary judgment.
WHEREFORE, for these reasons, Appellants, Eugene Miles Prentice,
Richard M. Spaziano, and Carl William Pollock respectfully request that
the Court reverse the summary judgment entered against them and render
a judgment ordering Frost Bank to take nothing.
Respectfully Submitted,
PENDERGRAFT & SIMON, L.L.P.
2777 Allen Parkway, Suite 800
Houston, TX 77019
Tel. 713-528-8555
Fax. 713-868-1267
/s/ William P. Haddock
By: Robert L. Pendergraft
Texas Bar No. 15743500
rlp@pendergraftsimon.com
William P. Haddock
Texas Bar No. 00793875
whaddock@pendergraftsimon.com
Counsel for Eugene Miles Prencitce &
Richard M. Spaziano
/s/ Carl William Pollock*with permission by WPH
Carl William Pollock
1200 Barton Creek Blvd. #3
Austin, TX 78735
Tel. 512-656-6374
bpollock@healthcarerecoveryadvisors.com
Appellant, pro se
26
Certificate of Compliance
1. This brief complies with the type-volume limitation of TEX. R. APP. P.
9.4(i) because it contains 5,411 words, excluding those parts exempted
by Tex. R. App. P. 9.4(i)(1).
2. This brief complies with the form and typeface requirements of TEX. R.
APP. P. 9.4, using the Palatino, Helvetica Neue, and Optima typefaces in
14-point or larger for body text and 12-point for footnotes.
/s/ William P. Haddock
William P. Haddock
Certificate of Service
I hereby certify that a true and correct copy of the foregoing Appellant’s
Brief has been served on the following counsel/parties of record via e-
service, in accordance with the Tex. R. App. P. 9.5 and local rules for elec-
tronic filing on the 21st day of December 2015:
Kendall D. Hamilton Carl William Pollock
Law Office of Ken Hamilton 1200 Barton Creek Blvd. #3
900 RR 620 South Austin, TX 78735
Suite C101#164 bpollock@healthcarerecoveryadvisors.com
Austin, TX 78734 (by agreement)
Counsel for Frost Bank Appellant, pro se
/s/ William P. Haddock
William P. Haddock
27
Appendix
Description of Document Tab No.
Order and Final Summary Judgment ................................................................. 1
Commercial Guaranty Agreements:
• Eugene Miles Prentice ................................................................................. 2
• Richard M. Spaziano .................................................................................... 3
• Carl William Pollock .................................................................................... 4
• Bruce W. Ling ............................................................................................... 5
Tex. R. Civ. P. 166a ................................................................................................. 6
28
Tab 1
DC BK15223 PG1939 Filed in The District Court
of Travis County, Texas
AUG - 5 2015 tff
NO. D-1-GN-13-000711
At <f./ S' 3 fi!M·
Velva L. Price, District lerk
FROST BANK, § IN THE DISTRICT COURT
Plaintiff, §
§
v. §
§ OF TRAVIS COUNTY, TEXAS
CARL WILLIAM POLLOCK, §
EUGENE MILES PRENTICE, and §
RICHARD M. SPAZIANO, §
Defendants § 126th JUDICIAL DISTRICT
ORDER AND FINAL SUMMARY JUDGMENT
On June 22, 2015, came on to be heard Plaintiffs Motion for Traditional and No-Evidence
Summary Judgment ("Plaintiffs Motion"), Defendants, Eugene Miles Prentice's and Richard M.
Spaziano's Cross-Motion for Summary Judgment and Defendant, Carl William Pollock's Motion for
Summary Judgment (collectively, "Defendants' Motions"). The Court has considered Plaintiffs
Motion and Defendants' Motions, the responses to the respective Motions filed by the parties, the
admissible summary judgment evidence, the pleadings on file and the applicable law.
The Court finds that Plaintiffs Motion should be GRANTED because there is no genuine
issue of material fact and Plaintiff is entitled to a judgment as a matter of law and that Defendants'
Motions should be DENIED.
It is therefore, ORDERED, ADJUDGED and DECREED that Plaintiffs Motion is hereby
GRANTED and Defendants' Motions are hereby DENIED.
It is further, ORDERED, ADJUDGED and DECREED that Plaintiff, FROST BANK, have
and recover judgment against Defendants as follows:
1111111111111111111111111111111111111111111111111111111
004152767
1
507
DC BK15223 PG1940
1. Against Defendant CARL WILLIAM POLLOCK, the sum of $360,471.60, which
sum includes "Guarantor's Share of the Indebtedness" as described in Plaintiffs Motion of
$356,277.34 and 50% of accrued pre-judgment interest, collection costs and reasonable attorney's
fees through June 22,2015 of $8,388.52 which equals $4,194.26, plus 50% of the interest accruing
on the $360,4 71.60 calculated at the rate of eighteen percent (18.0%) per annum from the date of
judgment until paid, plus 50% of reasonable attorney's fees of at least $7,500.00 for each successive
appeal, and plus 50% of all costs of court incurred herein.
2. Against Defendant EUGENE MILES PRENTICE, the sum of $360,471.60, which
sum includes "Guarantor's Share of the Indebtedness" as described in Plaintiffs Motion of
$356,277.34 and 50% of accrued pre-judgment interest, collection costs and reasonable attorney's
fees through June 22, 2015 of $8,388.52 which equals $4,194.26, plus 50% of the interest accruing
on the $360,471.60 calculated at the rate of eighteen percent (18.0%) per annum from the date of
judgment until paid, plus 50% of reasonable attorney's fees of at least $7,500.00 for each successive
appeal, and plus 50% of all costs of court incurred herein.
3. Against Defendant RICHARD M. SPAZIANO, the sum of $360,471.60, which sum
includes "Guarantor's Share of the Indebtedness" as described in Plaintiffs Motion of $356,277.34
and 50% of accrued pre-judgment interest, collection costs and reasonable attorney's fees through
June 22, 2015 of $8,388.52 which equals $4,194.26, plus 50% of the interest accruing on the
$360,4 71.60 calculated at the rate of eighteen percent (18.0%) per annum from the date of judgment
until paid, plus 50% ofreasonable attorney's fees of at least $7,500.00 for each successive appeal,
and plus 50% of all costs of court incurred herein.
2
508
DC BK15223 PG1941
It is further ORDERED, ADJUDGED AND DECREED that once Plaintiff receives or
collects sums from any one or more of the above Defendants equal to "Guarantor's Share of the
Indebtedness" as described in Plaintiff's Motion of $356,277.34 plus 100% of accrued
and post-judgment interest, collection costs and reasonable attorney's fees for trial and appeal since
the date "Guarantor's Share of the Indebtedness" was determined also, as described in Plaintiff's
Motion, then this judgment shall be deemed to be satisfied in full.
It is further ORDERED, ADJUDGED and DECREED that Plaintiff shall be allowed all writs
and processes as are necessary for the enforcement and collection of this judgment. All relief not
expressly granted is DENIED. This judgment disposes of all claims and all is a FINAL
JUDGMENT and is appealable.
SIGNED this __.5_ day of August, 2015
JUDGE GISElA D. TRIANA
200tb DISTRICT COURT
APPROVED AS TO SUBSTANCE AND FORM AND ENTRY REQUESTED:
lAW OFFICE OF KEN HAMILTON
900 RR 620 South
Suite ClOl #164
Austin, TX 78734
512/261-9938
KENDAlL D. HAMILTON
STATE BAR NO. 08831900
hamiltonlaw@austin.rr.corn
Attorneys for Plaintiff Frost Bank
3
509
DC BK15223 PG1942
APPROVED AS TO FORM, ONLY:
PENDERGRAFT & SIMON, lLP
2777 Allen Parkway, Suite 800
Houston, TX 77019
713/528-8555
713/868-12675857 (fax)
-
Byh#:t#cl
ROBERT-L.
)//
STATE BAR NO. 15743500
rlp@penderwaftsimon.com
Wll..UAM P. HADDOCK
STATE BAR NO. 00793875
whaddock@pendera:mf!simon.com
Attorneys for Defendants, Eugene Miles Prentice
and Richard M. Spaziano
1200 Barton Creek Blvd #3
Austin, TX 78735
512/656-6374
bpollock@healthcarerecoveryadvisors.com
4
510
Tab 2
ge 1 of 4)
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D!-IZ-toQ7 U3t4Gpa frNrFlOiT NATL AU511D
COMMERCIAt. GUARANTY
Loan fllq: sooz·
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CQMMERCIAL GUARANTY
Loan No: 900:2 !Ccn'tlnued) Pago 3
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472
[Page 4 of 4)
T-TDD P. OOS/tDll H4l '
COMM!=RC!AL auARANTV
! Conunued) Pega4
t11 I.GnqoJ, 108Wtll ..,m 1111 QT, g!, 01, ol, Cll'll'lll:a>lt!Cim at, tlftCI twlliWIII_, 101 1l'lf
promuSIIIy .nDJe ugraO!Milr
1\da.rta Dcu:..mm11 TM ..otoo 'II..,. WI All ptomoiCDty M>m•. trtGor oa-roto, '""" ermroll!1l&nlll
•aawrroy avrnml>l\ll, llltlrlg:olgu, dlldS al
dQt. .monro, II ... I'MIO:S, UI"'"T Cl!liatllfjll 111«1aii!IU, INI' ID DOlfi lntllnoiml!IU,
I!DC\I-niS. W1111111111 """' Dl
llll!l!ftlll/111 1110 tn will\ tlli>illr1CJI\I>!IMOb
tACH AC:)(!'JQWI.J;QI'iU K•WfNG liMP AI.&. Thl! PJOV!SION3 OF T)IIS QII-'Min"l APiP AGilE$ T IU
Tli\I.US. l1ol o\PD(nOii, t:lU4li.J,NTDR Tt1AT lt11! t0Ufii'AATY IS GUAilAtt10R'S
l 01' lNtS Ot.IARAIOT'I TO
1111 THR G!CTION '0\.lll.O.TION OF GUARliNTY'. f'ID
CIIJII!IANTY WIU. CON,.ue Tl!illlliWIUI:J Lt.! THE M4Nl'IEII BeT FQI!Ttl
ll't \.l:NDSliS LIIEDI!SSARV TO MA.rtl Tl1lll QUA!IAIIT't
!' TkiS lluMIANTt IS tiATell MAY .U. ZDII?.
I C:IIAMNTOR:
l
I
I
473
Tab 3
age 1 of 4)
COMMERCIAl GUARANTY
Borrower: NATIONAl. INSURANCE PARTNERS. INC . . . lander: THE. FROST NATIONAL BANK
OOWNTOWN AUSTIN FINANCIAL CENTER
1608 MESA RIOGE lN P.O. 80X 1600
AUSTIN, TX 78735 SAN ANTONIO, TX 78296
Guarantor: RICHARD M. S P A Z I A N O · · · · · · · ·
70 CEDAR BAY OR
WARWICK , Rl 02888
GUARANTEE OF PAYMENT ANO PERFORMAN E. For good end valuable conaldsratlon, Guarantor absolutely and unconditionally guarantees
full and punctual and aatlllfactlon of G arantor'a Share of tha lnciebtedneu ol Borrower to L.encler. and tha performDnc:e and discharge
of all Borrower'$ obllgatlol\8 under tha Note an the Ralal:$d Documanla. This is a guaranty of payment and parform11nca and not cl colf8ctlon,
ao Lend or can enforce this Guaratlty ageinat Gu r antor even when lender hila not ru<hausted IAndllr's against anvo:mo else obligBted to
pay the! lndebtsdne9s or against any ecuring the> lndabtadn<ls,., this Gusrant\f or any other guaramy of tho Indebtedness. Guarantor
will mskco anv payments to Lander or Ita order, n demand. in legal tenller of the United St,.trn ot Amarica. in aama.dov without aet-off or
deductirm or counterclaim, and will othetwlaa p rform Bonowar'a obligations undor the Note and Relatad Docume!'tl:s.
INDEBTEDNESS. l'he word "lndabtednaB.";• &s sed In this Guaranty means all of the principal amount outatanding from Umr1 lo time and at any
one or timaa, accrued unpaid intaraat arson and all collection cosm and legal expansaa related thereto permitted by law, Lender'a
reasonable eUQtnevs' fees, arising !rom .. and obligations that Borrower individually or collocti\lely or interchangeably
with olhars, owes or will owe LeMar, · Document$ and anv modifiCations, refinancings,
toosofldations end substitutions of the No ···- 'Re'hita'.r'D'OC'umanta.
If Lrmder presently holds ona or more guarantle , or raceivea guaramies ftom Guarantor, Lender' a rights under all gunrnrrrlea
shall be cumulative. This Guarentv shall not (u legs apocllicllliV provided bglow to the cootnuy) affect ot Invalidate any such other guaranties.
Guatanror'a liability will be Guar<tntor•a ll{lgrega a liability under the terms of this Guarantv and any such other untsrminated guaraoties.
GUARANTOR'S SHAR£ OF THE INOEBTEONES • The words "Guarantor's Share ol the as used [n this Guarsnw mean 50.000%
al Dli thi!O principal amoum. lntarost thereon t tho extent not prohibited by taw, and atr collection coats, e><penses end Lender's raasaneble
attomave' leas whether or not there Is a lawsul , and II tiler., Is a lawsuit. any lass and costa for trial and appeals.
Lrmdar ahall dBtermlne Guarantor's Share ol t lndebtadnass when Lander makes demand on Gueramor, After a daterminatHin, Guarantor's
Share of tl'l$ Indebtedness will only be redvcDd by euma actually Plllld by GllllfBntor under this but will not be reduced by sums from
anv olher sourca Including, but not limited to, auma realized from ony collateral securing Ina lndebtedne""' or this GuarantY. or plllymenta by
BllVOnll 01har than Gu11rantor, or reducticma opar&ti011 or 1!1w, judicial ordat or equitable principles. Lender hall th9 eolu abliolllto
discratlon to determine how sums shall be appll d amon9 guaranties of VIe Indebtedness.
TIT& above limitation on llatllllty Is not a restrfcti n on the amount or the Note of BorrowOK to Lender either in the aggregate or at any one time,
CONTINUING GUARANTY. THIS GUARANTY ENCOMPASSES A liNE OF CREDIT AND GUARANTOR UNOERSTANOS ANO AGREES THAT
THIS GUARANTY SHALL BE OPEN AND CONT NUOIJS UNTil THE INDEBTEDNESS JS PAID IN FUlL AND THE lENDER DECLARES THAT THE
UNE OF CRI<DIT IS FUlLY SATISFIED, PERFOR EO AND TERMINATED.
DURATION OF GUARANTY. This Guaranty wil take affect received by lander without necanity at eny acceptance by Lander, or any
notice to Guarantor or to &mower, and wiU c ti"ull i" lull force until all the lndebtednell• shall have been fully ond llnJJIY paid and satlstied end
ell of ·Guarantor' a oth<lr obliQatlons under Ulll uanlnt\f shall have baon J"Jr!ormvd In full. F'leleaM ot any other guarantor or terrninodon of any
other {IUDrantv ot lha Indebtedness ahe.ll not af ct liability nf Guaral1tor under this Guaraoty. A 111110cotlon Lender nrcoi\lea lrotn eny one or
mora Guanmtora shall not affect the liability of any ramalnlng Guarantors unde• this Gu8ranty. This Guuanty covers e fevolvlng line e>f (;redlt
and It Ia •pec:lflcaiJy afrtlclpaotad that lluctuatlo wnl occur 11'1 tha aggragaw amount of th& lndabtednua. Guarantor •peclllc:elfy aclmowl•dgea
and tho! In th1> amount of t lndebtedneoa, 11ven to zaro doll are 10 0.00), ahelt not con•tJtuta a tonnf•H•tltm or this Guattn\ly,
Guanmtor'a llabnlty under this Guuanty •hall t rmlnato only upon [AI urmlnatlon 1n writing by Borrower and Lendar of the Uri& of cr&dit,. IBI
payment ol the lndebtodneu In lull In letJIII ta dar, and ICI pavment ln full In legal wndor of 1111 or Guarantor'a othar oblllilallonl un4ar thT•
GuarBnt\f.
GUARANTOR'S AUTHORIZATION TO LENDER, Gu•raotor outhorizos Lender, wltho"t notlea Qr demand and without lunnlng or otluorwlae
affa$\g GuarB:ntDr'a llubllty under tllb Guaranty, from time to time; (AI to mpke OM or mora additional secured or uM&CiJTed loeM to
Borrower, to laasa equipment or other gooda to Borrower, or otherwiEe to e>rtend additional credit to Borrower; ·lBl to alter, compromise,
ral'lllw, extend, accelerate, or otherwiu chanQe one or mere times the time for payment or other terms of the lndebtednaas or any part of the
iodilbtedneaa, incloJdlng lncreaua end decteauea of the rate at Interest on tho Indebtedness; extension& may be repee.tad encJ may ba for longer
than lhe o<iginalloan term; ICI to tako snd hold security far the 111 thiG Guarar1ty or the lndebtednasa. and u:change, enforca. waive,
lail or decide not to perfect, a11d releate anv such 1acurity, with or without the substitution ol MW collateral: (Ol to teleaso,
substit\Jta, agree not to aus. or dul with 10ny ona or more of Borrower'& sureties. endoraerP. or other guarantors on e.ny· or in any manner
LBndar lEI to determine /low, whllo end what application ol payments and credits shell be mede on the l!'ldebtedness; (f} to
Dpply 6Uch eecurltv and direct the ordar or mannir of &ale thereof, Including without limitation, anv nonjudicial sale permittod by the tl'lrmn of the
controlliny nr;:urity agreement or de!ld of tru1t, n Lender in iU di$Crttion rney detarmloe; {GI to sen. transfer. asalgn or grant participations in
all or any Pilrt ol the lndebtedn!Hill; and IHI to asalgn or tr11nsler this Guarenty ln whole or In pert. ,......t...t..Jo.&,jl..(,;..,.._.lllllll
0\JAI'IANTOR'S REPRESeNTATIONS AND WARI'IANTIES. Guarantor represents ancS warrants to Lender that IAI no rapreaentetioM or
B-1
476
(Page 2 of 4)
COMMERCIAL GUARANTY
Loan No: 9002 (Continued) Page 2
agreemenu ol tillY kind hava been made to Guarantor which would limit or qualify in anv wav the term& g.f thi$ Guaranty; 181 this G.Wiranty le
executed at Borrower's request and not et the rsqll8llt of Lander; (Ct Guarantor has full power, right ami authoritv to enter illto this Guaran1y;
tol the provisions of this Guaranty do not conflict wilh or result in a default undM any asroomel\t 01 oth11r binding upon
and e1o not result In a vtolotion of any lew, regulation, court decrae ur order applicable to Guarantor; IE) Guargntor has not and will not, without
!he prior written consent of 81111, lea$8, assign, encumbar, hypothecate, tr&nsfer, or otherwise clsposa of all of
Guarantor's assets, or any interest therein; (FJ upon Lander's request. Guarantor wll1 provide to t&od81 flnaoclal credtt form
tn Lender, and all such fmancial information which currently has been, and aU future tin&nchu wn!ctl woll be provrdad to
Leodar is and· will ba true aoo correct in all material reapecta aod fairly pronnt Guerantor'a financial condiiJon as ol the datli'o tha linollclal
information Ia provided; (GI no malarial adwr!JB change occurred In Guarantor's financial condition sinr:e the dale ol the moat recent
Rnanclal !rt&tamenta provided to Lander ll/1d oo ev8flt haa occurred which tnoy matarially adversaly Guaruntor's financial condition; (HI
no UU(Jtltlon, claim, lnvaatlg;ltlon, adminlatrlltiVII proceeding or almll&r e!>ti<lr"l (Including thaoe for unpaid taxes} agllinst Is or
thre&«Jn&d; Ill Landor hes made no to Guarentor as to the cradltwotthlness of Borrower; and (JI Guarantor has established
adequate means of Clbteinlng from Borrower on a continuing basis regarding Borrower's frnencial Ou.arantor egreas to
keep •daQUotelv lnformod from •uch means of arw facts, events, or circumstances which might In any way alfact Guarantot'e rlsks under this
Guarenty, and Guarantor further agrees thet, abaent 11 req\Je!lt for information, lender shell heve no obligation to l:lisclose to G"a1antor any
Information or documarrta acqtJired by lender ir. ths couraa of Ita ralatloMhlp wlth Borrower.
GUARANTOR'S WAIVER$. Except as prohibited by wpplieebla law, Guarentor wetve3 any right to r11quire lender IAI to continua len(ling
money or to 11xtend Dthar credit to Botrower; IB) to mako any p111sentment, protest, dem&nd. or notice of any kind, Including no1lc:e of any
or tM cr of anv nonpayment related to any collateral, or notlco of any octlon or nonactlon on tluo p!lft or E!arro:wa• •
Lender, any surety. endorser, or other guarantor In connection with tha lndabtedne1111 Qr in C:Qnnection with the creation ol new or addit•on!ll
loam or obllgetlona; ICI to resort far ps.yment or to proceed diroolly or ol once agaln.t eny per$on. illcluding Borrower or any otller guarantor;
101 to proceed egainat or allhaust any collateral held by Lander from Borrower, 8fiY ather guarantor, or any other peraon; lEI to
notic!l of the terme, time, place of eny public or privets sale of personal property aeO!.IIitv held by Londef from aorrower or to comply With
any othor appllcabiD provisions of the Uniform Commercial Code; (Fl to p\JrtUB ony other remedy within Lendar'a power; or [GI to commit any
aet or omlsslon of env k.lnd, Of at any time, with respect to any matter whatsoever.
Olllltllntor waives all rlghU of Guarantor under 34 of thu Tuxes Buslrresa and Commerce Code. Guarantor also wllivaa any and 11111 rlght9
or deleAIIea baaed on suretyship or lrnpalrrnent of colleter111 wcludin(l, but nat nmited to, any rlghu or defen$et arising by reuon of {A) any
'one action• 01 • antl-daficiem:v• law 01 allY othllr law whll:h miiV prevent lender from bringing any action, locluding e claim far deficillncy,
egalnBt auarantot, bafore or efter Lender's commencemunt or Qomptortlon any foreolosura action, aither judicially or by GJoearcisa ol a power ot
sara; tBI any election of remedies by tender which det<trovs otharwiae adversely afhJCU aubrogatlon rights or GtJarnntor's rlghta
to prot86d aoeinst Borrower for reimbursement, Including withollt flmltatlon, anv lou of rights Guarantor may suffar by reason of any taw
llrnltlng, qualifving, '" diacharQing the lndllbtedn-eas: !CI env dl9llbility or other defense of Borrower. of any other guarantor, or ot any otl'ler
por9on, ar by rell5on of the eesaation of Bortowar's lllilblllty from any whatsoever, othllr than payment In full in legal tandar, of thit
lndabtadnesa; (OJ uny right to claim dillchar;e uf the llldebtednen on the baela of unjustified impairment of any collateral for tha lndebtednll!la;
lEI any statvte of llmitatioJ\8, if .n eny time any or suit b1ought by lender again$t Is commenced. there is Ol.ltstandlllQ
lndabtodnen which is l'lr:rt bortad by any appneable atatute of limitations; or IFl any givan to at law or in equity other than
actuel payment $nd of th11 lndebtednaes. If psyment ia rnada by aorrawl>r. whether voluntarily ur or by ony thiod party,
oil the and thereafter lender Is fore od tO 1emit the amount of that pevrnent to Borrower's trustee In bllnkf"tilltcy or to anv .similar
under anv federal or state bankr\lptcy lew or law f01 the relief 1:1f debtora, tha Indebtedness snell be coAAidered unpaid for tho purpose of
the enforcement of this
Guarentor fulther walvas end agr"• not to a:seart or et time any deducl!ono to the amount guaranteed undsr this Guaranty for eny
claim of aatoff, counterclaim, counter demand, recoupment or eimilllr 1ight. whsther such claim, demand or right may be asserted by the
Borrow81', the G1.1erentor, or both.
QUARANTDR'S UNDERSTANDING WITH RESPIOCT TO WAIVERS. Guarantor warrants end egrees that each of the w&lvers set forth ab<ove 19
made with GuarantOf'B full knowledge of ita sigllifieance and eoosequences and that, under the circumstances, Unt waivers are teeeonabla and
nat contrarv to PtJbllc policy or law. II env eucll wuiver Ia datonnlned to be contrary to any applicable law ar public policy, such waiver shall be
efleotive only ta the ..xtant permitted by law or public policy. ·
RIGHT OF SETOFF. To th.:r by applicable law, lsnd&f reserves a ri11ht of setoff In !Ill Guarantor' a accounts wfth Lender
(whether chec:kine, savings, or some other account). This Includes all er;counts Guarantor holds Jointly with •omaone elgo and all accatmta
Guarantor may In the future. Howavar, this does not Include any IRA or Keogh accounts, or any ln.lut accallllts for which setoff would be
prohibited by lew. Guarantor Lendllf, to tile a ...tenf permitted by applicable law, to hol!l these funds If there is a ds leult, and lender
may apply th6 funds lo lhasa to pay what Guarantor owes under the terms of thlo GuarantY.
SUBORDINATION OF BORROWER'S DEBTS TO GUAaANTOR. Guarantor agreaa that the 1nclebtednen, whattler nGW axlatlng or hereafter
created, shall be suparior to any c:latm tho.t Guaraf1tor may now have or her11efter acquire against Borrower, whether or nat Borrower becomea
ln!iolvent. Gu,rantor hereby eocpresaly &ubordlnatsa any claim Guararrtor may hBVe against Sotrower, upon any account whetsoa11er, to any
claim that LBI1der may now or horeaftar have again11t Botrowar. In the ev11nt of irn;olvency •nd conseq\Jant liquidation of the asseta ol Borrower,
through bankr1.1ptcy, by an 8$rlignmant for tha benefit of creditors, by voluntary liquidation. or othetwl!le, 1:he asset& of BorrowM to
tl>& payment of the claims of Lender and Guarantor shell bo pald to lellder and shall be first llflplied by Lllndoot ta the lndabtadnasa.
Guarantor does hereby assign to Lender all cllllrnt which it mav have or acquire against Bolfower or against any assignee or trustee In
bankluptc'l of Borrowa1; ptovlded however, thet auch assignment shall be affactivs only for the purpoaa of as aurin(} to Lendat lull payment in
lsgal tander ol U\e lndebtedtlllea. If lender ao requeats, eny flOtes Qt credit agreemant11 now or hareefter avidar\Cing eny dabta 01 obligalionl of
Bo!Towsr to Guarantor shall be marked with a leoend that tha aetna el.lbjoGt to thla Guaranty and shall ba deliverad to lAnder. Guarantor
agreea, and is herli!by authorized, in the narna ol Guarantor, from lime to time to file finandng Matements and continuation statements
and til axecute documanta and to taka auch other ac:t!ons a Lender da11ms nacassltl'y or appropriate to perlect, and enfolf;:e its rights
under this G11•raonty. ·
MISCELlANEOUS PROVISIONS. The following mlacallanaoua provisions era a part of thb Gllaranty:
Anandmel'ltll. This Gl.larenty, together with any Related Documents, r::onstitutBll the entire and agreement of the parties as
to the mettera aat !orth En this Guarentv. No alteration of or emendmerrt to this Guaranty ahall ba ethlctiva unless glven in writing end
tloned by the party or partlea aol.lght to be clulrgad oo bound by thil alteration or amendment.
AttomDYa' file;; &panna. agrees tCl pay upon demand all of Lender's CCllltA and expenses. lnell.ldiag lender's reasonable
attorn&ys' fellS and l.el\d1u'.a legal expana1", Incurred in coMal;tion with tho enf<>rr:ament of this Guaranty. Landor may hlte or pay
aomeona elsa to help enforce tl'lls Guaranty, and Guarantor shall pal( the oosu aJtpun$811 of sl.lch e.nlorcemant. Coats and axpenses
477
(Page ! of 4)
COMMERCIAL GUARANTY
Loan No: 9002 (Continued J Page 3
include landar• 11 reuonahte attomsys • tees and leg a! exJl(lnaas whether or not there is a lawso.rlt, inclllding Lender'• raascmabla Ott0tf\8Y$'
laas and lagalllllpensaa 1or bankruptcy prcx;eadlnga !including efforts to modify or vacaUt UIV aU\Omath: !ltaY or lnjunctlonl, appeals, and
any anticipated post..judgment collection .services. Guarantor also s:hall pay all COUll coalS and auch additional fees as may be directed by
tha court.
Capdon H.. adlnga. Caption headings In this Guaranty are far purposaa only and aro nat to be to intarprat or l.he
provi5ion' of thi' Guaranty.
Goltilmlno Law. This Guarantf wiD be gover11ad by fedam le.w appllcabla to Lender and. to the elrtent nal preempted by fellaral law, the
laws of the Stetfl Df Taos without regard to Its conflicts of law This Guaranty has been accaptad by landar In the Stete of
Ta)(as.
Choi<;& of Venue. If thore Is a lawsuit, ancllf tho tfanaaction by this Guaranty occurred in BEXAR County, Guarantor aoroaea upon
Lalldar's ruqoNt to submit 10 tha jurisdictiOn ol the oourt6 or BEXAR County, State of Texas.
lnteQratlon. Guarantor turtl'>tlr agr$et 1hDt Guarantor haa raad and fully understands the terms of 1tU8 Guaranty; Guarantor has had the
opportunitf to ba advised by Guaranror·a attorney with raspect to this Guaranty; the Guaranty fully reflects Guarantor's intontionll and parol
evidence is not required 1o intarprat the terms of thls Guaranty. l'lereby indemnifin$ 1111d holds lender harmless from all
clairria, damaoall, and costs !lnctudl11g lender's attornavs" fees} suffered or incurred byl!lndar as a r88ult of any breach by Guarantor of the
warrantias. and agreements of thla peragraph.
1/lterpretatiCMI. In 1111 cases where there IG more than one Sorrow11r or Gunrantor, then ell words used in this in the singular a:hall
be deamao to hallll bean used in '"" plural whera the context and con5ttuc;tlon so requlro; end where there Ia more tnan one eorrowcr
n11mod in this Guaranty or when thla Guaranty Ia alCocumd by more than ono Guarantor, the words "Bonowa1• end "Guarantof"
t!Nij)ll(:ti,.ly shllll mean all and any MO or more of mem. The warda "Guarantor," "Borrower, • and "L11nder• include the hairs, auccas$ota.
aasigna, and ttllnllfarees of each or them. lf a court finda that any prolhaion of this Gus rantv lo m>t valid or ahould oot be enforced, th11t
fact by Itself will not that tha re$t of this GU8ranty will not b11 valid or enforced. Therefore, a oourt win enforce the reat of th11
provisions of this Guaranty even if a provlelo11 of this may be found to be invaHd or unentorc:eable, If any one or more of
Borrowar or Guaranttlr are corporations, partMrships, limited Uabltlty or similar entities, it ia not nacBSS8fV lor Lender to lnqui111
Into the IMJWers of Borrow..r or Goorantor or ol tile officers, diraC1ors. partners, managers, or other agents acting or purl)r;orting to act on
their behalf, and any m11de or croaled iA reliance upon the prolassed exercise of aucl\ powers ahall boa guetenteed under thi:.
Guaranty.
Notlcae. Any notk:e required to be given under this Guaranty snell be given In writing, and shall be effective when actuaDy delivered. when
recei..,.d by [unlass o!Nirwlea required by t11wl, when deposltlld with a nationally overnight courier, or, if
mailed, when depo$lted in tho United State' mall, aa first eless, certified or registered mall postage prllpaid, dir!ICted to the addresses
ahown naar the beolnntng of thfs Guaranty. Any parw may change its addraae lor notices under this Guaranty by giving formsl written
ootice to thG other parties. $peeiMng that th11 purpose ot the 11otlce Is za change tl'ca party's add rasa. FOl' notk:e purposes. Guarantor
agreos to kGEII) lender Informed at all tlmea of Guarantor's current addrea&. Unlaas otherwise provided or requirlld by lew, if tlwre is more
one Guarantor, any notico given by Lender to any Guarantor is deemed to ba no1ice gi'llen to all Guarantors.
No Walll8r by Lender. Lender shall not ba dllemoo to havo waived any rlghta under lhia Guaranty unless such wai¥er is given in writing and
$IQned by lender. N1> delay or omission on the part of Lender In alCetclslng any right operata a. a waiver of such right or any a !her
ri[Jht. A_ waiver by lander of a provision of lhia ChJIII!IIIlW shall nat prejudice or constitute a waiver of lender's ril)ht omerwise to demand
compllsnca with that provision or any other p<ovislon at thi11 Guaranty. No prlor walwr by lender, nor anv ;;guru of batween
lender and Guarantllr, ahall co-nstib.lte a waiver of any oll.ender's rights or of any of Guarantor' a oblltJat!ons as to 81"1V ful\Jfe transoctlons,
Whenever lhlill COI\911111 or Lender ia required under this Guaranty, 'the granting ol such consent by lenliar In any lns.tance shalt tiOt cons1itutn
continuing consent to &ubuequent lnstaru::&a whare such consent is requlrad and in all such consent may be granted or withheld In
the sokl dlscretlon of Lender. •
Succeuon a-nd Aulgna. Subject to any &tated il'l this Guaranty on of Guarantor's Interest, thl& Guaranty ahall be
binding upon end Inure to the benefit of the their auccessors and easigna.
WAIVER OF RIGHT. TO TRIAL BY JURY. THE UNDERSIGNED HEREBY WAIVES TRIAL BY JURY lN ANY ACTION. PROCEEDING OR
COUNTERCLAIM BROUGHT TO ENFORCE THIS AGREEMENT, TO COI.L.ECT DAMAGES FOR THE BREACH OJ' THIS AGREEMENT, OR WHICH
IN ANY OTHER WAY ARISE OUT OF, ARE CONNECTED TO OR ARE RElATED TO THIS AGREEMENT OR THE SUBJECT MATTER OF 11-HS
AGREEMENT. ANY SUCH ACTION SHAll.. BE TRIED BY THE JUDGE WITHOUT A JURY.
DOCUMENTS AND SIGNATURES. For purpos.ea ol n&gotletlng and finalizing thia c!ooUmlilnt if thi' cklcument Is by
facsimile machin" c•taJ<"), it shan 1>11 beated lor 111U purposes as an original document. Additionally, the 9i(lnature of llfiY parw on this document
ttanamitterl by way of a rax machine aMit btl considered ror ali purpose& as 11n original signi>tu1'111. Any 5uch faxed document shall be conslllerod
to heva ttl$ nama binding lega1 effett a$ an otlglnal document. At the of any party, any document shall be re-exocutud by each
signatory party In an original form,
DEFINITIONS. The fol!owh1Q capltaUzad words end terms shall have the following meanings when us&d ln this Gu11ranty. Unless specifically
stated to tha contrary, all ralerencee to dollar amounts &hall mean amounta in lowful mona-, of the Unitlld States of Amerlu. Words and terms
usud In the c;;ingul&r ahall includll tha plural, and the plural shall include tho •lngular, as tlu! may require. Wcrds ami term& not otharvvlas
defined in this Guarantf shall have the meanings otulbut!ld 10 auch terms in the Uniform Commercial Coda;
Barrowar. The word "Borrower• meana NATIONAl INSURANCE PARTNERS, INC. anrf includes all co-'11ignars end co·mekera &lgrtlng tha
Nota and all their succi!Ssol3 end
Guarantor. The word means everyone signing this Guarsnty, lncludl"ii wlttlout limitation RtCHAFIO M. SPAZIANO, and 11'1 each
any 6igner's succassDr• and assigns.
Share of the lndabtedn'"•· The worde "Guarel\tor's Shate of tha Indebtedness• mean Guarantor';a indebtedness !O lender
more particularly descrUHJd In thlt Ciuaramv.
GUI'renty. The word "Guaranty' means this guaranty !rom Guarantor to lender.
lndebtedneaa. The word "lndebtedne$S" mlilons Borrower's to lander as more particularly described In this Guaranty.
Lender. The ward "Lender· means THE FROST NATIONAl BANK, its successor; and
Nlrte. Tho word "Note" muna lhe promissory note dated May 22, 2007, In tha orlginal priiiCTpal &mount of $\,000,000.00 1rom Bonowar
478
(Page 4 of 4)
f
COMMERCIAL GUARANTY
loan No: 9002 (Continued) Page 4
I to Lender, together whh all ranawals of, axtansions ol,
promill'lory note or agreement.
Related Ooc:uments. The
ol, ol, consolidations of, and
"Ral&tad Dooomentg• mean all promissory notes, credit agreements, loan &grooments, environmental
for the
guaranties, agreemente, mortgages, deeds of trust. 5ecurity .:Jeads, mcrtiJagn, and all other insttvments,
Blllaement' aoo documents, whether now or hereafter Bxisting, !I:JCecuted in connection with the Indebtedness.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING R.EAD ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS
TERMS. IN ADDITION, !ACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS El'FECTIVE UPON GUARANTOR'S EXECUTION AND
DELIVERY OF THIS GUARANTY TO lENDER AND THAT THE GUARANTY Wll.L CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH
IN TiiE SECllON TinED "DURATION OF NO FORMAL ACCEPTANCE BY LENDER IS NliCiSSARY YO MAKE THIS GUARANTY
EFFECTIVE. THIS GUARANTY IS DATED MAY 22. 2007.
479
Tab 4
•age l of 4)
COMMERCIAL GUARANTY
Borrower: NATIONAl INSURANCE PARTNERS. I N C . - Lender: THE FROST NATIONAL. BANK
'17
08MEsi1oGE LNI
AUSTIN. TX 78735
- DOWNTOWN AUSTIN FINANCIAL CENTER
P.O. BOX 1600 .
SAN ANTONIO, TX 78296
Guarantor: CARl WilLIAM POLlOCK . . . . . . ...
1508 MESA RIOGE LN
AUSnN.TX 78735 -
========-======
GUARANTEE OF PAYMENT AND PERFORMANCE. For good and valuable consideration, Guarantor absolutely and gvar;mtee.s
full and punctual payment end aatisf&ctiof'l of Guarantor's Share of the Indebtedness of Borrower to Lender, and the performance and discharge
ol ell Borrower's obligations under the Nota and the Related Documents. This is a guaranty ol payment and performance and not C>f collection,
so Lender can eniC>rce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to
pay the Indebtedness or against anv collaterel securing the Indebtedness, this Guaranty·or any other guaranty of the Indebtedness. Guarantor
will make any payments to lender or its order, on demand, in legal tender of the United States of America, in :!lime-day funds. without set·olf or
deduction or and will otherwise perform Borrower's obligacions under the Note and Related Documents.
INDEBTEDNESS. The word "Indebtedness" as used in this Guaranty mean.s all of the principal amount outstanding from time to time and at any
one or more times. accrued unpaid interest thereon and all collection coats and legal expenses related thereto permitted by law, Lender's
rea&onable Pttorney;;' 1ees, arising from any and all debts, liabilities end obligations that Borrower individually or collectively or inter<;hangeably
with others, owes or will owe Lender under the Note and Related Do<:uments and any renewals, extensions, modifications. refinancings.
consolidations and substitutions of the NC>ta and Related Documents.
If Lender presently holds one or mora guaranties, or hereafter receives additional guarenties from Guarantor, Lender'11 rights under all guaranties
shell cumulative. This Guaranty shall not (unless specifically provided below to the tontraryl affect or invalidate any such other guaranties.
Guarantor'$ liability will oo GuarantC>r's .aggregate liability under the terms of this Guaranty end any such other umerminated guaran1ies.
GUARANTOR'S SHARE OF THE INOEB1EDNESS. The words "Guarantor's Share of the Indebtedness'' as used in this Guaranty mean 50.000%
ol all the principal amount, interest thereon tC> the extent not prohibited by law, and all collection <;0$t$, expenses and Lender's reasonable
&HomQys' lees whether or not ther"' is a lawsuit, and if there is a lawsuit, any fee$ and co&ts for trial and appeals.
lender shall determine Guarantor's Share ot the Indebtedness when Lender mskes demand on Guarantor. After a determination, Guarantor's
Share of the Indebtedness will only be reduced by &ums octually paid by Guarantor under this Guaranty, but wllf not be reduced by sums from
anv other source including. but not limited to, sums realiled from any collateral securin,. the lndebtedn&S$ or this Guaranty. or payments by
anvone other than Gue.rantor, or reductions by operation ol fllw, judicial Otder or eQuitable principles. lender has the sole and absolute
distretion 10 dato;trrnine how sums shall be applied amono guaranties ot the Indebtedness.
The above limitalion on liability is not a restriction on the amount of the Note ot Burrower to Lender either in the aggregate or at eny one time.
CONTINUING GUARANTY. THIS GUARANT'f ENCOMPASSES A LINE OF CREDIT AND GUARAN'TOR UNDERSTANDS AND AGREES THAT
THIS GUARANTY SHALL BE OPEN AND CONTINUOUS UNTIL THE INDEBTEDNESS IS PAID IN FULL AND THE LENDER DECLARES THAT THE
LINE Of CREDIT IS FULLY SATISFIED, PERFORMED AND TERMINATED.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender wlthC>ut the necenity of any acceptance by Lender. or any
notice to Guarantor or to Borrower, and will continue in full force until all the Indebtedness shall have boen fully and finally paid and se.tisfiad and
all of Guarantol's other obligations under this Guaranty shall have been perlo1med in full. Release of any other guarantor or termination ol any
ot.her guaranty of the Indebtedness shall not aftect the liability of Guarantor under this Guaranty. A revocation Lendar receives ftom any one or
more Guaramors shall not altect the liability of anv remaining Guarantors under this Guaranty. lhla Gua<anty covers a revolving line of cnodil
and it 1& sptrelncally anllclpatad thai fluctuation• will occur In the eggre;ate amount of tha lndebtednau. Guarantor specifically acknowledg111
and agrees that fluctuations In the amount of the lndebtednan, even to zero dollars I$ 0.00), :shall not conatitute o termination of thlll Guaranty.
Guarantor'a liability under this Guaraflty termlnata only upon (A) termination In writing by 8ortowar .and Lander of the line of credit, (B)
payment of the lndabtadneu in full In legal tender, and !Cl payment In full in legal tander of all of Guarantor's other obUgatfof'la under thla
Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender. without notice or demand and without lessening or otherwia.,
Guar11ntor'5 llabilhy under this Guaranty, from time to time: (A) to make ona or more additional secured or unsecured loans to
Bouowar, to lease equipment or o-ther goods to Borrower, or otherwise 1o extend additional credit to Borrower; (81 to compromise,
renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of tile Indebtedness or any part C>l the
Indebtedness, including increases and decrea$es of the rate of interest on the lndebtltdnass; extensions may be repeated l!nd rnay oe ror longer
than the original loan term: ICJ to take and hold se<:urity for the payment of this Guaranty or the Indebtedness, and enforce, waive.
subordinate, fail or decide not to perfect, and relaase any such security, with or without iha substitution ot new collateral; lO) to ratease,
substitute, agree not to SIJe, or deal with any one or more of Borrawer's sur(lties, endorsers, or other guarantors on any terms or in any maMar
Lender may chOose; (El to determine how, when and what applicBtion of paymenls and credits sh811 be made on the lndebtednus; IF) to
apply such security and direct the order or manner ol sale thereof, including without limila\ion, any nonjudicial sale permitted by thEI terms ot tha
contmlling security agteement or deed of trust, as Lender in its discretion may d11termine; · to sell, tnmsfer, essign or grant participations in
all or any part of the Indebtedness; and (H) to or tran$fer this Guaranty In whOle or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor tepresents and warrants to Lender that !Al no representations or _"P'',.,.._P""""'-
D
491
(Page 2 of 4)
COMMERCIAL GUARANTY
Loan No: 9002 (Continued) Page 2
agreements ol any l<.ind !lave been made to Guarantor which would limit or qualify in eny wev the terms ol this Guanmty; [Bl this Guaranty is
executed al Borrower's request and not et the request of Lender; !CI Guarantor has lull power, right and authority to enter into this Guaranty;
(0) the provisions o! this Guaranty do not Cl>nllict with or result in " delault under any agreement or other instrument binding upon Guarantor
and do not result io a ..,;oletion oi any law, regulation. court decree or order applicable to Guarantor; (EI Guarantor 1\as not and will not. without
the prior written consent of Lender, t;eR, lease, assign, encumbet, hypothecate, or otherwise dispose of all or substanttally all of
Guarantor's assets. or any interest therein; If) upon Lender's request, Guarantor will provide to Lender financial end credit information in lorm
•cc::eptable to Lender. end all such linanciel information which currenttv has been, and all future financial information which will be provided to
Lender is and will be true and correct in aU respects and fairly present Guarantor's financial condition as of the detes the financial
inlorm11tion is providad; [GJ no mat&rlal adverse chang& has occurred in Guarantor's financial conllition since the date of the most recent
linenciel sUitements provided to lender and no event has occurred which may materially adversely aflect Guarantor's financial condition; IHl
no liligalion, claim, investigation, administrative prcx;eeding or similar action Cinc1uding those for unpeid t11xasl 11gsinst Guarantor is or
threatened; !II Lender has made no representation to Gu<tramor as to the creditworthiness of and [J) Guarantor has established
adaquate means of obtaining from Borrower on a continuing basis information regarding Borrower's linancial condition. Guarantor agrees to
keep adequately informed from such means of any tacu, events, or circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information, Lender shaH have no oblig;uion to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. excapt as prohibltod by applic11bla law, Guarantor waives any right to require Lender (A} to continue lending
money or to extend other credit to Borrower; [ll) to make any presentment. protest, demand, or notice ol any kind, including notice of any
nonpayment of the lndabtedness or of any related to any r;ollataral, or notice of any action or nonaction on the part ol Borrower,
Lender, anv surety, endorser, or otlwr guarar>tor in connection with the lndobtedne.ss or in connection with the creation of new or additional
loans or obligations; ICI to tesort for payment or to proceed dirt!(:tly or at once against any person, including Borrower or any other guarantor;
(01 to proceed directly aga
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