Potoroo, LLC v. Muntasser

          Dated December 27, 2017

         Decision and Order Regarding Plaintiff’s Motion for Partial Summary Judgment (Docket No. 29.0); Defendant’s Motion for Partial Judgment on the Pleadings (Docket No. 27.0); Defendant’s Motion for Summary Judgment (Docket No. 30.0); and Defendant’s Motion to Strike (Docket No. 30.4)

          OPINION

          Brian A. Davis, J.

         This is an action in which plaintiff Potoroo, LLC (" Plaintiff") seeks to collect a final judgment entered against non-party Geneva Furniture IV, LLC (" Geneva") in June 2015 from defendant Emadeddin Muntasser (" Mr. Muntasser" or " Defendant") pursuant to a written guaranty that Mr. Muntasser executed in May 2006 (the " Guaranty").^[1] The material facts are largely undisputed. Mr. Muntasser is (or was) Geneva’s founder and principal. He signed the Guaranty in conjunction with Geneva’s execution of a commercial lease (the " Lease"), whereby Geneva agreed to rent certain real property in Stoughton, Massachusetts (the " Premises") from Plaintiff’s predecessors-in-interest (collectively, the " Landlord") for use as a retail furniture store.^[2] The Lease, which also was executed in May 2006, had a ten-year term. In signing the Guaranty, Mr. Muntasser agreed to " absolutely and unconditionally guarantee" all of Geneva’s various obligations to the Landlord under the Lease, including Geneva’s obligation to pay rent and other charges associated with its occupation and use of the Premises.

         Geneva proved to be less than an ideal tenant and frequently fell behind in its rent payments to the Landlord. After several legal skirmishes, the Landlord filed a summary process eviction action against Geneva in Stoughton District Court in early 2009 (the " Stoughton Action"). The Stoughton Action eventually was resolved by way of a settlement that the parties memorialized in a written " Agreement, " dated February 12, 2009 (the " Settlement Agreement").^[3] The Settlement Agreement expressly states, in part, that " [t]he Lease is hereby validly terminated ..." Appendix, Exhibit D, at 2. It further provides that " judgment shall enter in favor of [Landlord] for possession and for the sum of $127, 914.78, " which the Settlement Agreement elsewhere describes as the total amount owing from Geneva to Landlord " for past due rents and/or use or occupancy and fees ..." Id. at 1-2. Notwithstanding the fact that the Settlement Agreement gave possession of the Premises to the Landlord, the parties nonetheless agreed to permit Geneva to continue to occupy the Premises under terms spelled out elsewhere in the Settlement Agreement, provided that " the conduct of [Geneva was] at all times in compliance with, and not in breach of, those requirements as defined and set forth in the Lease as if said Lease was still in force and effect ..." Id. at 3. Mr. Muntasser signed the Settlement Agreement as Geneva’s " Manager, " but did not personally guarantee any of its terms. Id. at 4.

         As leopards rarely change their spots, Geneva continued to be delinquent in its rent payments after the Settlement Agreement was signed, with the result that it eventually was forced to vacate the premises sometime in 2013. Additional litigation between the parties ensued. Geneva filed an action in Superior Court (the " Prior Superior Court Action") seeking the return of its security deposit under the provisions of the Settlement Agreement, and Plaintiff (which was, by then, Geneva’s official landlord) counterclaimed for Geneva’s own purported breach of the terms of the Settlement Agreement. The Prior Superior Court Action was tried to a jury in May 2015. The result was a loss for Geneva on its claim, a victory for Plaintiff on its counterclaim, and an eventual Judgment in favor of Plaintiff against Geneva in the amount of $437, 100, plus interest (the " Judgment").^[4] As of the present date, the Plaintiff’s Judgment against Geneva remains unpaid.

         Plaintiff commenced this action against Mr. Muntasser in July 2015. As set forth in its Amended Complaint (Docket No. 25.0), Plaintiff’s explicit goal in bringing this action is to compel Mr. Muntasser to personally satisfy the Judgment entered against Geneva under the terms of his written Guaranty. Amended Complaint, ¶ 1. According to Plaintiff, by means of that Guaranty, Mr. Muntasser " unconditionally guarantee[ ]d to [Plaintiff] the full, faithful and punctual performance of all obligations and liabilities of Geneva to [Plaintiff]." Id., ¶ 26. Mr. Muntasser, for his part, denies any personal liability to Plaintiff for payment of the Judgment, arguing that he never guaranteed Geneva’s obligations under the Settlement Agreement, which formed the basis for Plaintiff’s breach of contract counterclaim in the Prior Superior Court Action and the resulting Judgment.

         The matter came before the Court most recently on the parties’ respective dispositive motions, all of which present essentially the same core issue: i.e., Is Mr. Muntasser obligated under the terms of the Guaranty to pay the Judgment entered against Geneva in the Prior Superior Court Action? The Court conducted a hearing and heard oral argument on the various motions on December 19, 2017. Upon consideration of the parties’ written submissions and the oral arguments of counsel, the Court concludes that Mr. Muntasser is not obligated under the terms of the Guaranty to pay the Judgment entered against Geneva in the Prior Superior Court Action. Accordingly, Plaintiff’s Motion for Partial Summary Judgment is DENIED, and Defendant’s Motion for Summary Judgment is ALLOWED for the reasons explained, briefly, below.

         Summary judgment is appropriate when, viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Mass.R.Civ.P. 56(c); Cargill, Inc. v. Beaver Coal & Oil Co., 424 Mass. 356, 358 (1997). Actions based upon unambiguous agreements are particularly susceptible to resolution on summary judgment. " The interpretation of an unambiguous contract is a question of law for the court." Sparks v. Microwave Assocs., 359 Mass. 597, 600 (1971). In deciding such a question, the courts " must interpret [the] contract language fairly and reasonably ... to ascertain the intention of the parties and to effectuate their purpose." Honey Dew Assocs. v. Creighton Muscato Enters., 73 Mass.App.Ct. 846, 849-50 (2009) (internal quotation marks and citation omitted). When the " agreement on its face is reasonably susceptible of only one meaning, a court is not free to alter the contract to reflect its personal notions of fairness and equity." Raymond Leasing Corp. v. Callico Distribs., 62 Mass.App.Ct. 747, 749 n.3 (2005) (internal quotation marks and citations omitted).

         In this case, it is effectively undisputed that Mr. Muntasser did not guarantee Geneva’s obligations under the Settlement Agreement. The written Guaranty that Defendant executed in May 2006 extends, on its face, only to Geneva’s obligations under the Lease. Appendix, Exhibit C . The Lease, by the plain terms of the Settlement Agreement, was " validly terminated" as of February 12, 2009. Appendix, Exhibit D, at 2. From that point onward, all of Geneva’s obligations to Plaintiff (or its predecessors in interest) were governed by the Settlement Agreement, which expressly replaced the Lease as the operative document that controlled the parties’ relationship.^[5]

         It also is undisputed that the Judgment entered against Geneva in June 2015, and that forms the basis for Plaintiff’s claims against Defendant in this proceeding, was based upon Geneva’s breach of its obligations under the Settlement Agreement (which Mr. Muntasser did not guarantee), as opposed to Geneva’s breach of its obligations under the Lease (which Mr. Muntasser did guarantee).^[6] Massachusetts law holds that " [w]hen one guarantees the contract of another, the guarantor is bound by the terms of the contract guaranteed." Merchants Nat’l Bank v. Stone, 294 Mass. 243, 251 (1936). Because Mr. Muntasser guaranteed the Lease and not the Settlement Agreement, he cannot be held liable for amounts owed by Geneva under the latter, including any amounts due pursuant to the Judgment.

         To the extent that Plaintiff now claims that it is entitled to recover future, unpaid rent from Mr. Muntasser under the terms of the Lease, that claim is not included in Plaintiff’s Amended Complaint and, therefore, does not preclude the entry of summary judgment in favor of Defendant. See Coastal Orthopaedic Inst., P.C. v. Bongiorno, 61 Mass.App.Ct. 55, 60-62 (2004) (party may not defeat summary judgment by advancing new, previously unarticulated theory of liability). Even assuming that Plaintiff had pled such a claim, however, the Court doubts its validity given that the Settlement Agreement would seem to qualify as an accord and satisfaction, which would extinguish all of Plaintiff’s rights under the Lease and Mr. Muntasser’s associated Guaranty. See, Kattar v. Demoulas, 433 Mass. 1, 8 n.6 (2000) (an immediate accord and satisfaction occurs when the " [p]arties ... agree that [the] accord itself shall be the satisfaction of the old right and, therefore, if the claimant accepts a promise with that agreement, his original claim is at once extinguished"); Seronick v. Levy, 26 Mass.App.Ct. 367, 373 (1988) (note maker’s settlement of debt extinguishes any obligation of guarantor). See also Continental Bank & Trust Co. v. Akwa, 58 Wis.2d 376, 388 (1973) (" As a general rule the payment or other satisfaction or extinguishment of the debt or obligation of the principal discharges the guarantor"); First Interstate Bank of Nev. v. Shields, 102 Nev. 616, 619-20 (1986), citing authorities (under general principles of guaranty law, " the payment or other satisfaction or extinguishment of the principal debt or obligation by the principal or by anyone for him discharges the guarantor"); Industrial Inv. Corp. v. Rocca, 100 Idaho 228, 232 (1979), citing authorities (" It is a general rule that payment or satisfaction of a principal obligation discharges a guarantor and being once discharged a revival of the debt in any way will not renew his liability"); Holcombe v. Solinger & Sons Co., 238 F.2d 495, 500 (5th Cir. 1956) (applying New York and Florida law) (" It is a general rule that payment or satisfaction of the principal obligation discharges the guarantor").

         In light of the foregoing, Defendant’s Motion for Partial Judgment on the Pleadings is DENIED as moot, and Defendant’s ...