In the Missouri Court of Appeals Eastern District DIVISION TWO
DENNY LABANTSCHNIG, ) No. ED112169 ) Respondent, ) Appeal from the Circuit Court ) of St. Louis County vs. ) Cause No. 19SL-CC04557 ) ROYAL GATE, INC., ET AL. ) Honorable Kristine A. Kerr ) Appellants. ) FILED: November 19, 2024
Opinion
Dr. Cyrus Alizadeh (Alizadeh) appeals from the trial court’s judgment finding him liable
on a breach of guaranty (Personal Guaranty) in favor of Denny Labantschnig (Labantschnig) in
connection with a loan obtained to help keep Royal Gate, Inc. (Royal Gate) in business.
Alizadeh raises six points on appeal. Point One argues the trial court misapplied the law by
overbroadly interpreting the term “Agreement” in the Personal Guaranty beyond Alizadeh’s
intention to guarantee only an irrevocable letter of credit (ILOC). Point Two contends no
substantial evidence supported the trial court’s finding that the Personal Guaranty guaranteed the
debt Royal Gate incurred under a Credit, Procurement, Reimbursement, and Indemnity
Agreement (CPRI Agreement). Point Three maintains the trial court misapplied the law because
Alizadeh never agreed to extend Royal Gate’s original repayment deadline under the CPRI
Agreement. Alizadeh alleges the repayment extension amounted to a material alteration that discharged him as guarantor. Points Four and Five, respectively, assert no substantial evidence
supported the trial court’s findings that the Personal Guaranty was tendered to Labantschnig or
that it was supported by adequate consideration. Lastly, Point Six argues the trial court erred by
awarding attorneys’ fees to Labantschnig because the Personal Guaranty’s fee provision applied
only to the liabilities of Royal Gate and not of Alizadeh.
We find the Personal Guaranty unambiguously incorporated the underlying CPRI
Agreement between Labantschnig and Royal Gate. Therefore, the trial court did not err in
finding Alizadeh liable for the debt incurred by Royal Gate and owed to Labantschnig under the
CPRI Agreement, and we deny Points One and Two. No material alteration was made to the
Personal Guaranty when Royal Gate’s repayment deadline was extended for several months at
the same interest rate, because under the terms of the Personal Guaranty and CPRI Agreement,
Alizadeh agreed to a continuing guaranty for all then-existing and future liability arising out of
the CPRI Agreement. Alizadeh was thus not entitled to be discharged from his guaranty, and we
deny Point Three. We deny Point Four because Alizadeh contracted to waive his right to notice
of Labantschnig’s acceptance of the Personal Guaranty. We deny Point Five because the
Personal Guaranty served as prima facie evidence of consideration and did not require showing a
benefit to Alizadeh. Finally, the trial court did not err in awarding attorneys’ fees because the
Personal Guaranty provided for them in that Labantschnig’s breach-of-guaranty action was
brought against Alizadeh to recover losses incurred in connection with Royal Gate’s obligations
under the CPRI Agreement. Accordingly, we affirm the trial court’s judgment. Because
Labantschnig is the prevailing party on appeal, we grant his motion for attorneys’ fees pursuant
to the guaranty, and we remand for the trial court to enter an award of reasonable attorneys’ fees.
2 Background
Royal Gate owned and operated two automobile dealerships. Robert Kelly (Kelly) and
Alizadeh were the shareholders and owners of Royal Gate through Royal Gate Holding
Company. Kelly was the president and majority shareholder of Royal Gate and ran the day-to-
day operations. Alizadeh was the minority shareholder of Royal Gate. Labantschnig was
brought on as a manager in 2015. Royal Gate was experiencing financing issues on its vehicle
inventory with its lender, NextGear. In 2018, Royal Gate requested that Labantschnig obtain a
line of credit from a bank (Bank) in order to loan funds to Royal Gate to assist with the
company’s financing issues until it could sell its two dealerships. Labantschnig agreed to do so
only if a guaranty was provided. Bank’s chief lending officer (Bank Officer) discussed the loan
details with Kelly, Alizadeh, and Labantschnig, and explained to them that a line of credit would
be arranged. Following loan negotiations, Labantschnig and Royal Gate entered into the CPRI
Agreement.
The CPRI Agreement provided that Labantschnig would obtain a $1.5 million line of
credit with Bank for the benefit and use of Royal Gate for short-term credit needs, pending the
sale of one of its two dealerships, and a standby ILOC against which NextGear could draw in the
event that Royal Gate failed to meet its financial obligations. The CPRI Agreement indemnified
Labantschnig against all losses, damages, interest, costs, and expenses. The CPRI Agreement set
forth Royal Gate’s repayment obligations for the principal balance and accrued interest,
including monthly interest payments of $6,000. The repayment deadline was set on the date of
the first dealership’s closure or June 1, 2019, whichever occurred first. The CPRI Agreement
was on the first three pages of a five-page document. The fourth page was the Personal
Guaranty, and the fifth page was blank. Each of the five pages had the same footer identifying
3 the page number out of five as well as the same timestamp and version of the “LOC Agreement.”
Labantschnig and Kelly signed the CPRI Agreement in Kelly’s office on March 23, 2019.
The same day, Alizadeh signed the Personal Guaranty in Kelly’s office. The Personal
Guaranty guarantees Royal Gate’s liabilities under the CPRI Agreement. Under the Personal
Guaranty, Kelly, Kelly’s wife, and Alizadeh agreed to be jointly and severally liable to
Labantschnig in their personal capacities and as for Kelly and Alizadeh liability also extended to
them in their capacity as owners of Royal Gate. The Personal Guaranty states in relevant parts:
For and in consideration of the premises, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce [Labantschnig] to perform its obligations hereunder, the undersigned, jointly and severally, do hereby personally guaranty to [Labantschnig] the payment of all liabilities and obligations of Royal Gate to [Labantschnig] and Bank of any nature arising under and pursuant to the Agreement, whether now existing or hereafter incurred, whether created directly or acquired by [Labantschnig] by assignment or otherwise, whether matured or unmatured and whether absolute or contingent. The undersigned shall reimburse [Labantschnig], to the extent that such reimbursement is not made by Royal Gate, for all ILOC draws, expenses (including counsel fees), and other losses incurred by [Labantschnig] in connection with any liabilities or obligations of Royal Gate under the Agreement. ... This is a continuing guaranty and shall remain in full force and effect irrespective of any interruptions in the business of any of the parties. All monies available to [Labantschnig] for application in payment or reduction of the liabilities or obligations of Royal Gate may be applied by [Labantschnig] in such manner and in such amounts and at such time or times as it may see fit to the payment or reduction of such liabilities or obligations as [Labantschnig] may elect, and the obligations pursuant to this guaranty shall not be affected by any surrender or release by Royal Gate of any other security held by it for any claim hereby guaranteed. The undersigned hereby waive (a) notice of acceptance of this guaranty, (b) presentment and demand for payment of any of the liabilities or obligations of Royal Gate, (c) protest and notice of dishonor or default to the undersigned or to any other party with respect to any of the liabilities or obligations of Royal Gate, (d) all other notices to which the undersigned might otherwise be entitled, and (e) any demand for payment under this guaranty.
Two days later, on March 25, 2019, Labantschnig procured a $1.5 million line of credit
from Bank. The funds were deposited into Royal Gate’s operating account, and Royal Gate used
4 the funds to operate its business. Royal Gate made four monthly interest payments to
Labantschnig.
Royal Gate completed the sale of the first dealership on September 6, 2019, triggering its
full repayment obligations to Labantschnig under the CPRI Agreement. On September 25, 2019,
Labantschnig, through counsel, made a demand for Royal Gate to complete its outstanding
payments. Royal Gate did not repay Labantschnig at that time. Kelly and Alizadeh met with
Labantschnig, and Kelly explained that Royal Gate would be able to pay him after closing the
second dealership.
After the second dealership closed on October 3, 2019, Royal Gate repaid Labantschnig
half of the principal balance on the line of credit. Royal Gate made no further payments towards
either the principal or the interest. Labantschnig paid Bank the remaining $750,000 principal
balance and $41,096.04 in accrued interest.
In March of 2020, Labantschnig filed a first amended petition, which included the subject
claim for breach of guaranty against Alizadeh. 1 The case proceeded to a bench trial. The trial
court issued judgment in favor of Labantschnig, finding he was entitled to recover on the
Personal Guaranty against Alizadeh. Alizadeh filed this appeal. Labantschnig moved for
appellate attorneys’ fees, and we took the motion with the case.
Standard of Review
“[W]e will affirm the judgment of the trial court in a court-tried case unless the judgment
is unsupported by substantial evidence, is against the weight of the evidence, or erroneously
declares or applies the law.” Lehman v. Auto. Invs., LLC, 608 S.W.3d 733, 737 (Mo. App. E.D.
2020) (internal citations omitted); see also Ivie v. Smith, 439 S.W.3d 189, 198–99 (Mo. banc
1 Labantschnig also brought a claim against the Kellys, and they entered into a consent judgment.
5 2014) (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976)). “We view the evidence
in the light most favorable to the judgment, accepting all evidence and inferences favorable to
the judgment as true and disregarding all contrary evidence and inferences.” Lehman, 608
S.W.3d at 737 (internal citation omitted). “We defer to the trial court’s judgment on contested
issues of fact, but we review issues of law de novo.” Id. (internal quotation omitted); see also
Martin v. McEvers, 104 S.W.3d 785, 787 (Mo. App. W.D. 2003). “[T]he interpretation of a
contract is an issue of law, which we review de novo.” Ebert v. Ebert, 627 S.W.3d 571, 579
(Mo. App. E.D. 2021) (internal quotation omitted).
“We are primarily concerned with the correctness of the result, not the route taken by the
trial court to reach it.” Clark v. Smith, 644 S.W.3d 835, 840 n.4 (Mo. App. W.D. 2022) (quoting
Mo. Soybean Ass’n v. Mo. Clean Water Comm’n, 102 S.W.3d 10, 22 (Mo. banc 2003)); Lehman,
608 S.W.3d at 737 (internal quotation omitted). Therefore, we will affirm the trial court’s
judgment “if it is correct on any ground supported by the record, regardless of whether the trial
court relied on that ground.” Clark, 644 S.W.3d at 841 n.4 (citing Mo. Soybean, 102 S.W.3d at
22); Lehman, 608 S.W.3d at 737 (internal quotation omitted).
Discussion
I. Points One and Two—The Personal Guaranty Guaranteed the Debt Incurred under the CPRI Agreement
In Points One and Two, Alizadeh argues the trial court erred in finding he guaranteed the
CPRI Agreement. Specifically, in Point One, Alizadeh maintains that the trial court misapplied
the law because it should have strictly construed the ambiguous term “Agreement” in the
Personal Guaranty to comport with his understanding that the Personal Guaranty was limited to
Labantschnig procuring an ILOC in favor of Royal Gate’s lender, NextGear, rather than a line of
credit to meet Royal Gate’s short-term credit needs. In Point Two, Alizadeh asserts no
6 substantial evidence supported the trial court’s finding that Royal Gate’s debt to Labantschnig
under the CPRI Agreement was guaranteed by the Personal Guaranty.
To recover on guaranty, a plaintiff must show the following:
(1) that the defendant executed the guaranty, (2) that the defendant unconditionally delivered the guaranty to the creditor, (3) that the creditor, in reliance on the guaranty, thereafter extended credit to the debtor, and (4) that there is currently due and owing some sum of money from the debtor to the creditor that the guaranty purports to cover.
Pulaski Bank v. Nantucket Partners, L.C., 428 S.W.3d 729, 734 (Mo. App. E.D. 2014) (quoting
ITT Com. Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 382 (Mo. banc 1993)).
Alizadeh argues the Personal Guaranty does not purport to cover the debt incurred by Royal Gate
owed to Labantschnig. We disagree.
Alizadeh correctly notes that a guarantor’s liability is to be strictly construed according to
the terms of the guaranty agreement. Boatmen’s Bank of Jefferson Cnty. v. Cmty. Interiors, Inc.,
721 S.W.2d 72, 79 (Mo. App. E.D. 1986) (internal citation omitted). When interpreting the
terms of a guaranty agreement, as with any contract, “[w]e read the contract as a whole to
determine the intent of the parties and give the terms used their plain and ordinary meaning.”
Schoedinger v. Beck, 557 S.W.3d 531, 536 (Mo. App. E.D. 2018) (citing Dunn Indus. Grp., Inc.
v. City of Sugar Creek, 112 S.W.3d 421, 428 (Mo. banc 2003)). When a guaranty agreement
explicitly incorporates other documents, such as an underlying debt agreement, we construe them
together. See Big A LLC v. Vogel, 561 S.W.3d 28, 35 (Mo. App. W.D. 2018) (internal citations
omitted) (noting further that even in the absence of explicit textual incorporation, a guaranty
agreement may be construed together with any contemporaneously executed agreements dealing
with the same subject matter as an aid in ascertaining the intention of the parties). “Matters
incorporated into contract by reference are as much a part of the contract as if they had been set
7 out in the contract in haec verba [verbatim].” Intertel, Inc. v. Sedgwick Claims Mgmt. Servs.,
Inc., 204 S.W.3d 183, 196 (Mo. App. E.D. 2006) (internal citation omitted).
Absent ambiguity in the guaranty itself, we will not consider extrinsic evidence to
ascertain the intent of the parties. Boatmen’s, 721 S.W.2d at 79 (“Any ambiguity in a guaranty
agreement should arise from the guaranty itself.”). “Where the parties have expressed their final
and complete agreement in writing and there is no ambiguity in the contract, the intent of the
parties must be determined solely from the four corners of the contract itself” and “extrinsic
evidence cannot be used to create an ambiguity.” Schoedinger, 557 S.W.3d at 536 (internal
quotations omitted).
Here, we reject Alizadeh’s claim that the term “Agreement” in the Personal Guaranty is
ambiguous. See Boatmen’s, 721 S.W.2d at 79–80 (internal citation omitted) (finding a guaranty
was clear and unambiguous by its own terms); see also Dunn, 112 S.W.3d at 434 (internal
citation omitted) (noting “strict construction does not entitle a guarantor to demand an unfair and
strained interpretation of the words used in order that it may be released from the obligation that
it has assumed”). The Personal Guaranty signed by Alizadeh explicitly and unambiguously
incorporates the CPRI Agreement. The Personal Guaranty is labeled as page four out of the
same five-page document containing the CPRI Agreement on pages one through three, and it
bears the same timestamp and version of the “LOC Agreement.” Moreover, the Personal
Guaranty expressly binds Alizadeh to “personally guaranty to [Labantschnig] the payment of all
liabilities and obligations of Royal Gate to [Labantschnig] and Bank of any nature arising under
and pursuant to the Agreement[.]” The Personal Guaranty requires Alizadeh to “reimburse
[Labantschnig], to the extent that such reimbursement is not made by Royal Gate, for all ILOC
draws, expenses (including counsel fees), and other losses incurred by [Labantschnig] in
8 connection with any liabilities or obligations of Royal Gate under the Agreement.” Given this
clear language, the trial court did not err by interpreting the term “Agreement” to mean the CPRI
Because the Personal Guaranty incorporates the CPRI Agreement, the trial court properly
construed them together to find Alizadeh guaranteed all liability arising out of the CPRI
Agreement. See Boatmen’s, 721 S.W.2d at 79 (internal citation omitted); see also Ulreich v.
Kreutz, 876 S.W.2d 726, 728 (Mo. App. E.D. 1994) (internal citations omitted) (finding a trial
court did not impermissibly extend the guarantors’ obligation by holding them liable on
promissory notes where the guaranty unambiguously guaranteed the payment of all loans, credit,
and indebtedness, such that the notes could be interpreted as loans covered by the guaranty).
Alizadeh attempts to argue that he should be discharged from his guaranty because he did
not understand what he was signing. He believed, based on prior conversations between the
parties, that the underlying debt agreement was going to be different than what was in the CPRI
Agreement. Specifically, Alizadeh maintains he only intended to guarantee Labantschnig’s
procurement of an ILOC against which NextGear could draw. However, because the
“Agreement” guaranteed by the Personal Guaranty is not ambiguous, we may not consider
extrinsic facts outside the Personal Guaranty or the incorporated CPRI Agreement to ascertain
the intent of the parties. See Schoedinger, 557 S.W.3d at 536; Boatmen’s, 721 S.W.2d at 79
(internal citation omitted).
Furthermore, Alizadeh acknowledges that failure to read and understand a contract is not
a defense to it. See Lopez v. GMT Auto Sales, Inc., 656 S.W.3d 315, 321 (Mo. App. E.D. 2022)
(quoting Chochorowski v. Home Depot U.S.A., 404 S.W.3d 220, 228 (Mo. banc 2013) (“[A]
signer’s failure to read or understand a contract is not, without fraud or the signer’s lack of
9 capacity to contract, a defense to the contract.”)). The trial court made the factual finding that
Alizadeh had the opportunity to read the Agreement but failed to do so. “[A] guaranty is a
contract, and, absent fraud, accident or mistake, a party is ‘held to have had knowledge of a
contract which he or she had an opportunity to read but did not by reason of indolence, folly or
careless indifference to the ordinary and accessible means of information.’” Mercantile Tr. Co.
v. Carp, 648 S.W.2d 920, 924 (Mo. App. E.D. 1983) (internal quotations omitted) (holding a
party’s failure to read and understand a continuing guaranty she signed did not permit her to
escape liability on it). Alizadeh nevertheless suggests this legal proposition does not apply here
because he was not a signatory to the CPRI Agreement. We disagree with his reasoning. As
stated above, the terms of the Personal Guaranty and the incorporated CPRI Agreement must be
construed together. See Big A, 561 S.W.3d at 35 (internal citation omitted); Intertel, 204 S.W.3d
at 197 (internal citation omitted); cf. Dunn, 112 S.W.3d at 435 (noting that an arbitration
agreement may be enforced against a guarantor who is not a signatory to the arbitration
agreement where the guaranty agreement incorporates the arbitration agreement by reference).
Therefore, Alizadeh’s failure to read either of their terms is no defense to liability. See Lopez,
656 S.W.3d at 321 (citing Chochorowski, 404 S.W.3d at 228); Mercantile, 648 S.W.2d at 924
In addition to providing for an ILOC, the CPRI Agreement expressly and unambiguously
provides for Labantschnig to procure a line of credit up to $1.5 million to meet Royal Gate’s
immediate short-term credit needs, thus the Personal Guaranty applies to any indebtedness
incurred from that line of credit. As the trial court stated, although Alizadeh may have credibly
testified that he never told Labantschnig that he would guaranty a loan from Bank for Royal
10 Gate’s expenses and short-term credit needs, that is exactly what Alizadeh promised in writing to
do.
Therefore, the trial court did not err by refusing to discharge Alizadeh as guarantor. See
Lehman, 608 S.W.3d at 737 (internal citation omitted). From the evidence presented at trial, the
trial court expressly found that Royal Gate was currently due and owing specific amounts on the
principal, interest, and others fees to Labantschnig that were covered by the Personal Guaranty,
thus Labantschnig could prevail on his claim for breach of guaranty. See Pulaski, 428 S.W.3d at
734 (citing ITT Com. Fin. Corp., 854 S.W.2d at 382). Points One and Two are denied.
II. Point Three—No Material Alteration Entitled Alizadeh to be Discharged from the Personal Guaranty
In Point Three, Alizadeh argues the trial court misapplied the law by not discharging him
from the Personal Guaranty on the grounds that Royal Gate’s repayment deadline under the
CPRI Agreement was extended without his consent. Alizadeh’s argument fails because there
was no material alteration without his consent. Alizadeh signed a continuing guaranty
authorizing and waiving notice of the change. By signing the Personal Guaranty, Alizadeh
consented to future liability incurred under the CPRI Agreement, which authorized continuing
payments until Royal Gate’s debt to Labantschnig was paid in full.
In support of his argument, Alizadeh correctly states the general rule that “any material
alteration of the guarantor’s obligation under the guaranty contract will discharge the guarantor .
. . unless the guarantor has consented to such alteration.” Id. at 732 (quoting Lemay Bank &
Trust Co. v. Lawrence, 710 S.W.2d 318, 322 (Mo. App. E.D. 1986)). Under the general rule,
extension of the repayment deadline for the guaranteed debt may constitute a material alteration
of the guaranty if the extension enlarges or lessens the guarantor’s liability. DeCota v. J.E.M.
Dev. Corp., 908 S.W.2d 884, 886 (Mo. App. S.D. 1995) (internal quotation omitted). A
11 guarantor who did not consent to a material alteration is entitled to be discharged from his
obligations under the guaranty. Pulaski, 428 S.W.3d at 732 (citing Lemay, 710 S.W.2d at 322);
DeCota, 908 S.W.2d at 886 (citing First State Bank v. Benson, 613 S.W.2d 888, 891 (Mo. App.
W.D. 1981)).
In this case, Royal Gate’s repayments to Labantschnig under the CPRI Agreement were
extended four months past the original deadline. In a meeting between Kelly, Alizadeh, and
Labantschnig, Kelly explained that Royal Gate needed more time to repay Labantschnig after
closing the first dealership and that they would repay him after closing the second dealership.
Although the interest rate was unchanged, Alizadeh maintains the accrual of four months of
additional interest materially altered his liability under the Personal Guaranty without his
consent, requiring the trial court to discharge him from his guaranty. Given the terms of the
Personal Guaranty and incorporated CPRI Agreement, we disagree. As will be shown in the
following analysis, Alizadeh failed to show that the extension of Royal Gate’s repayment
deadline modified his liability in a manner inconsistent with the terms of the Personal Guaranty
or incorporated CPRI Agreement.
Fatal to his appeal, Alizadeh ignores the continuing guaranty language in the Personal
Guaranty. “A continuing guaranty is a type of guaranty agreement in which the parties
contemplate guaranteeing a series of future debts or transactions, as opposed to a single debt or
transaction.” Pulaski, 428 S.W.3d at 733 (quoting Rheem Mfg. Co. v. Progressive Wholesale
Supply Co., 28 S.W.3d 333, 339 (Mo. App. E.D. 2000)). “Under a continuing guaranty, the
guarantor agrees to be secondary obligor for all future obligations of the principal obligor to the
obligee.” Id. (citing Rheem Mfg., 28 S.W.3d at 339). In this way, a continuing guaranty
preauthorizes changes to the underlying debt agreement that may enlarge or lessen the
12 guarantor’s liability and establishes the guarantor’s consent thereto by bringing those changes
into the scope of the guaranty agreement. See id.; see also 38 AM. JUR. 2D Guaranty § 70 (2024)
(“If the guaranty contract contains a provision which contemplates or authorizes in advance a
change in the terms of the principal contract, a change within the scope of that authorization does
not discharge the guarantor.”); 38A C.J.S. Guaranty § 99 (2024) (“[W]here the guaranty is of a
continuing nature and does not limit or restrict the period of credit, any reasonable change as to
the length of the credit will not relieve the guarantor from liability unless the extended period
materially changes the contract of guaranty.”). Missouri law recognizes that a continuing
guaranty may preclude application of the general rule by authorizing in advance the alleged
material alteration. See Pulaski, 428 S.W.3d at 733–34; Martin, 104 S.W.3d at 788; DeCota,
908 S.W.2d at 886–87; Boatmen’s Nat. Bank of St. Louis v. Nangle, 899 S.W.2d 542, 545–46;
Boatman’s, 721 S.W.3d at 79–80; LeMay, 710 S.W.2d at 323.
Here, the Personal Guaranty signed by Alizadeh authorized in advance all liability arising
under the CPRI Agreement. The Personal Guaranty is a “continuing guaranty” that extends to
“payment of all liabilities and obligations . . . of any nature arising under and pursuant to the
Agreement, whether now existing or hereinafter incurred, whether created directly or acquired by
[Labantschnig] by assignment or otherwise, whether matured or unmatured and whether absolute
or contingent.” Alizadeh also expressly waived: “(a) notice of acceptance of this guaranty, (b)
presentment and demand for payment of any of the liabilities or obligations of Royal Gate, (c)
protest and notice of dishonor or default to the undersigned or to any other party with respect to
any of the liabilities or obligations of Royal Gate, (d) all other notices to which the undersigned
might otherwise be entitled, and (e) any demand for payment under this guaranty.” Through
these terms, the Personal Guaranty extended Alizadeh’s guaranty to future obligations arising
13 under the CPRI Agreement and waived all notice of Royal Gate’s risk of defaulting on the initial
deadline and the ensuing four-month extension. Therefore, whether Alizadeh was notified of the
extension is irrelevant, as is his argument that his silence during a meeting about the extension
did not show his consent. Similarly, the Personal Guaranty’s ‘no-oral modification’ clause is
irrelevant because Alizadeh already consented in the Personal Guaranty to all future incurred
liability arising under the Agreement, and waived all entitled notice, so no further showing of
consent was needed for the repayment extension. See Pulaski, 428 S.W.3d at 732–34; Martin,
104 S.W.3d at 788; DeCota, 908 S.W.2d at 886–87; Nangle, 899 S.W.2d at 545–46.
The cases on which Alizadeh relies are not availing because they lacked continuing
guaranties or their guaranties were otherwise distinguishable. See Fuhrer v. Sheahan, 857
S.W.2d 439 (Mo. App. S.D. 1993); Citizens Bank of Smithville v. Lair, 687 S.W.2d 268 (Mo.
App. W.D. 1985); Benson, 613 S.W.2d 888. Neither Fuhrer or Citizens Bank had continuing
guaranties or any other contract language that could be construed as binding the guarantors to
changes to the guaranteed debt, thus their guarantors were appropriately discharged. See Fuhrer,
857 S.W.2d at 441–42; Citizens Bank, 687 S.W.2d at 270–71; see also Martin, 104 S.W.3d at
788 (distinguishing from Citizens Bank on the basis of a continuing guaranty); Nangle, 899
S.W.2d at 546 (same). Further, Citizens Bank had other significantly distinguishable facts. In
that case, a father signed the back of his son’s promissory note; after the note’s original due date
passed, the bank entered into a “so-called” extension agreement with the son, without the father’s
knowledge, which was executed after the original note’s due date, had a new interest rate, was
unsecured by collateral, and provided a new repayment schedule. Citizens Bank, 687 S.W.2d at
270–71. Unlike the father in Citizens Bank, Alizadeh signed a contract with a continuing
guaranty, and he had actual knowledge of the repayment extension, which did not change the
14 interest rate or any other terms that materially altered the CPRI Agreement or his guaranty. See
id. In Benson, the guaranty agreement had a continuing guaranty, but it only extended to
changes in liability made before the guarantor’s written notice of revocation and could not bind
the guarantor to changes made after such notice was given. Benson, 613 S.W.2d at 889; see also
DeCota, 908 S.W.2d at 886–87 (distinguishing from Benson by finding the terms of the subject
guaranty preauthorized the bank to grant extensions for repayment of the principal obligation
without notice or consent of the guarantor).
As noted earlier in our discussion, although the Personal Guaranty is an independent
contract, and Alizadeh did not sign the CPRI Agreement, the Personal Guaranty incorporates the
CPRI Agreement by reference, thus we interpret them together to understand the scope of the
Personal Guaranty. See Big A, 561 S.W.3d at 35 (internal citation omitted); Intertel, 204 S.W.3d
at 197 (internal citation omitted). Discharge is not an available defense to an alleged material
alteration of the guaranty where the change is made in accordance with an express provision in
either the guaranty or in the incorporated or contemporaneously-executed underlying debt
agreement. See Pulaski, 428 S.W.3d at 734 (citing Lemay, 710 S.W.2d at 322); Martin, 104
S.W.3d at 788. Here, the CPRI Agreement expressly requires Royal Gate to pay Labantschnig
all accrued interest on the line of credit until the principal balance is paid in full. The CPRI
Agreement thereby contemplates Royal Gate incurring additional liability to cover interest that
accrues in the event of a repayment extension. As such, the repayment extension was not a
material alteration of the CPRI Agreement because the additional interest payments at the same
rate were authorized by its terms. This, coupled with the continuing guaranty and notice waiver
provisions in the Personal Guaranty, shows there was no material alteration of the Personal
Guaranty without Alizadeh’s consent. See Big A, 561 S.W.3d at 35 (internal citation omitted);
15 Pulaski, 428 S.W.3d at 734 (citing Lemay, 710 S.W.2d at 322); Martin, 104 S.W.3d at 788. As a
result, Alizadeh was not entitled to be discharged from liability on his guaranty. See Pulaski,
428 S.W.3d at 734 (citing Lemay, 710 S.W.2d at 322); Martin, 104 S.W.3d at 788. 2 Finding no
trial court error, Point Three is denied.
III. Point Four—Waiver of Guaranty Acceptance Notice
In his fourth point, Alizadeh posits the trial court erred in entering judgment against him
because there was no substantial evidence that the Personal Guaranty was tendered to
Labantschnig. We deny the point because Alizadeh waived his right to notice of Labantschnig’s
acceptance of the Personal Guaranty.
One of the elements for a breach-of-guaranty claim is that “the defendant unconditionally
delivered the guaranty to the creditor[.]” Pulaski, 428 S.W.3d at 734 (quoting ITT Com. Fin.
Corp., 854 S.W.2d at 382); see also BV Capital, LLC v. Hughes, 474 S.W.3d 592, 597 (Mo.
App. E.D. 2015) (finding a factual dispute about whether the guaranty was mailed to the creditor
bank precluded summary judgment). The reason for this element is that, as with other contracts,
where there has been an offer to guarantee the performance of another’s undertaking, there is no
contract until the offer is accepted, and such acceptance has been made known to the guarantor.
Indus. Bank & Tr. Co. v. Hesselberg, 195 S.W.2d 470, 473 (Mo. 1946).
Alizadeh maintains he never tendered the Personal Guaranty to Labantschnig or
authorized Kelly to do so. However, as Labantschnig notes, Alizadeh expressly waived his right
to notice of Labantschnig’s acceptance of the Personal Guaranty by its terms, hence Alizadeh’s
alleged lack of knowledge regarding the fact that Labantschnig accepted the guaranty is no
2 We note that, contrary to Labantschnig’s argument, the outcome of this point is not governed by § 400.3-605, RSMo (2016) of Missouri’s Uniform Commercial Code (UCC). Article 3 of the UCC applies only when the underlying debt agreement is a negotiable instrument. No party has argued the CPRI Agreement is a negotiable instrument. See § 400.3-104(a).
16 defense to it. Specifically, the Personal Guaranty states that Alizadeh “hereby waive[s] (a)
notice of acceptance of this guaranty[.]” When a guaranty contains such a notice waiver
provision, the guarantor cannot later dispute satisfaction of the element of delivery to the creditor
on the grounds that he did not know about it. Hesselberg, 195 S.W.2d at 474 (finding substantial
evidence supported the creditor’s acceptance of offer and reliance thereon despite the guarantors
not being notified of the acceptance where the guaranty contained a provision waiving notice of
acceptance of the guaranty). Accordingly, Alizadeh’s argument has no merit.
Nevertheless, we note the record contains ample evidence that this element was met.
Even if the CPRI Agreement between Labantschnig and Royal Gate was signed before Alizadeh
signed the Personal Guaranty later the same day, Labantschnig testified that he would only
follow through with acquiring the loan from Bank to help Royal Gate if said debt was personally
guaranteed. See Don L. Tullis & Assocs., Inc. v. Gover, 577 S.W.2d 891, 897 (Mo. App. S.D.
1979) (internal quotation omitted) (“Although the guaranty promise may have been made at a
time subsequent to the creation of the principal obligation, the guaranty promise is founded upon
a consideration if the promise was given as the result of previous arrangement, the principal
obligation having been induced by or created on the faith of the guaranty.”). The record shows
Labantschnig accepted the Personal Guaranty and acted in reliance on it by procuring a line of
credit from Bank for $1.5 million only two days after Alizadeh signed the Personal Guaranty.
See Hesselberg, 195 S.W.2d at 474. Additionally, although we find no notice was required
under the terms of the Personal Guaranty, the trial court made findings of fact indicating
Alizadeh had constructive notice of Labantschnig’s acceptance of the Personal Guaranty, as the
record showed Alizadeh was aware of the line-of-credit funds flowing into Royal Gate’s
17 operating account that were used to pay operating expenses. See Lehman, 608 S.W.3d at 737
(internal citation omitted). Point Four is denied.
IV. Point Five—Consideration
In Point Five, Alizadeh alleges the trial court erred because there was no substantial
evidence that the Personal Guaranty was supported by consideration. We deny the point because
the terms of the Personal Guaranty established prima facie evidence of consideration, and
Labantschnig did not need to show the Personal Guaranty directly benefitted Alizadeh.
“A guaranty is a contract that must be supported by consideration.” Kansas City Live
Block 125 Retail, LLC v. Bhakta, 476 S.W.3d 326, 330 (Mo. App. W.D. 2015) (internal citations
omitted). Prima facie evidence of consideration may be found in the terms of the guaranty itself.
Id. (internal citations omitted). A guaranty’s recital of consideration establishes a rebuttable
presumption that “is sufficient to support the guaranty unless the presumption is overcome to the
satisfaction of the trial court by acceptable and persuasive evidence to the contrary.” Id. (internal
citation omitted).
Here, the Personal Guaranty states:
For and in consideration of the premises, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce [Labantschnig] to perform its obligations hereunder, the undersigned, jointly and severally, do hereby personally guaranty to [Labantschnig] the payment of all liabilities and obligations of Royal Gate to [Labantschnig] and Bank of any nature arising under and pursuant to the [CPRI] Agreement.
The language of the Personal Guaranty thus establishes prima facie evidence of consideration.
See id.
Alizadeh recognizes that the terms of the Personal Guaranty established a presumption of
valid consideration, but he contends he successfully rebutted it with contrary evidence that Bank
did not rely on the guaranty to extend credit to Labantschnig. However, even setting aside the
18 standard of review requiring us to disregard contrary evidence, Alizadeh misstates the
circumstances of this case. See id. (noting an argument challenging the trial court’s resolution of
disputed evidence of a guaranty’s consideration overlooks the standard of review for a court-
tried case). This was not a situation in which a guarantor directly guaranteed a borrower’s loan
from a bank in order to protect the bank from loss. In the guaranteed CPRI Agreement,
Labantschnig was Royal Gate’s creditor. The Personal Guaranty was not obtained at Bank’s
prompting but at Labantschnig’s. Through the CPRI Agreement, Royal Gate induced its
employee Labantschnig to borrow money from Bank in order to loan to Royal Gate for its short-
term credit needs. Labantschnig only agreed to the procure the funds if Royal Gate’s repayment
was personally guaranteed by Kelly and Alizadeh. Therefore, Alizadeh’s argument that there
was no evidence of Bank’s reliance on the Personal Guaranty is irrelevant.
We also reject Alizadeh’s alternative argument that there was no consideration because
he received no benefit from the Personal Guaranty or CPRI Agreement. A guarantor does not
need to receive any benefit from the guaranty (here, the Personal Guaranty) or underlying debt
agreement (here, the CPRI Agreement) in order for the guaranty to be supported by valid
consideration. Id. (internal citation omitted); United Sav. & Loan Ass’n v. Lake of Ozarks Water
Festival, Inc., 805 S.W.2d 350, 353 (Mo. App. S.D. 1991) (citing Gover, 577 S.W.3d at 896);
Mercantile, 648 S.W.2d at 923 (citing Gover, 577 S.W.3d at 896; Hesselberg, 195 S.W.2d at
474). Consideration may be, but does not need to be, found between the guarantor and creditor.
Bhakta, 476 S.W.3d at 330 (internal citation omitted). “[A] guarantor need not have an interest
in the debtor for a guaranty to be enforceable.” Id. at 331 (citing Mercantile, 648 S.W.2d at
924). “Benefit to the debtor or detriment to the creditor constitutes sufficient consideration to
support a guaranty.” Id. at 330 (citation omitted). “Benefit to a third person, a detriment to a
19 promisee, or a change in the promisee’s relations in consequence of the promise is sufficient
consideration to render the promisor obligated under a guaranty agreement.” United Sav. &
Loan, 805 S.W.2d at 353 (citing Gover, 577 S.W.3d at 896). Here, consideration could
adequately be supported by a benefit to Royal Gate or a detriment to Labantschnig, and, indeed,
Labantschnig provided $1.5 million to Royal Gate, benefitting the dealership business. See id.
Additionally, though not necessary to resolve the appeal, we are not persuaded by Alizadeh’s
argument that he received no benefit as he was a shareholder and owner of Royal Gate, which
benefited from Labantschnig’s loan, even though Labantschnig testified he did not think that
putting any of those funds towards operating costs ultimately benefited Royal Gate. Point Five is
denied.
V. Point Six—Attorneys’ Fees
In his final point, Alizadeh asserts the trial court erred in awarding Labantschnig
attorneys’ fees on his breach-of-guaranty action because the Personal Guaranty’s fee provision
applied only to Royal Gate’s liabilities and obligations, not Alizadeh’s. We find the plain
language of the Personal Guaranty shows the fee provision extends to Alizadeh in this action.
“To successfully challenge a trial court’s award of attorney[s’] fees on appeal in
Missouri, a party must show that the award is an abuse of discretion.” Rand Constr. Co. v.
Caravan Ingredients, Inc., 662 S.W.3d 44, 57 (Mo. App. W.D. 2022) (internal citation omitted).
A trial court abuses its discretion if it erroneously interprets a fee provision in a contract. See id.
“If a contract provides [for] the payment of attorney[s’] fees and expenses incurred in the
enforcement of a contract provision, the trial court must comply with the terms of the contract
and award them to the prevailing party.” Id. (internal quotation omitted).
20 As stated at the outset of our discussion, “it is well-settled that the liability of a guarantor
is to be strictly construed according to the terms of the guaranty agreement[.]” Ulreich, 876
S.W.2d at 728 (internal citations omitted). “The terms of a guaranty ‘are to be understood in
their plain and ordinary sense, when read in the light of the surrounding circumstances and the
object intended to be accomplished.’” Id. (internal quotation omitted). Fee provisions in
guaranties, and in incorporated or contemporaneously-executed underlying debt agreements,
may make guarantors liable for fees incurred directly against them or incurred by creditors
against the underlying debtor. See id. at 730 (holding a guarantor liable for a creditor’s
attorneys’ fees incurred when recovering on the guaranteed debt because, although the guaranty
was silent as to attorneys’ fees, such fees were covered by the underlying debt agreement).
As reprised earlier, the Personal Guaranty contains the following provision:
The undersigned shall reimburse [Labantschnig], to the extent that such reimbursement is not made by Royal Gate, for all ILOC Draws, expenses (including counsel fees), and other losses incurred by [Labantschnig] in connection with any liabilities or obligations of Royal Gate under the Agreement.
In light of this provision, we disagree with Alizadeh’s interpretation that the Personal Guaranty
does not provide for attorneys’ fees on Labantschnig’s action for breach of guaranty. The
Supreme Court of Missouri has interpreted “in connection with” as “to have a relationship with,”
and enforced the terms of a loan made in connection with a sale under the Missouri
Merchandising Practices Act. Conway v. CitiMortgage, Inc., 438 S.W.3d 410, 414 (Mo. banc
2014). Labantschnig’s right to recover against Alizadeh on his guaranty is certainly related to
Labantschnig’s attempt to be made whole on losses incurred in connection with Royal Gate’s
liabilities and obligations to him under the CPRI Agreement. See id. Therefore, the trial court
did not err in awarding attorneys’ fees. See Rand Constr. Co., 662 S.W.3d at 57 (internal
citation omitted); see also LeMay, 710 S.W.2d at 324. Point Six is denied.
21 VI. Labantschnig’s Motion for Appellate Attorneys’ Fees
During the pendency of this appeal, Labantschnig moved for appellate attorneys’ fees,
and we took the motion with the case. We found in Point Six above that the fee provision in the
Personal Guaranty provides for attorneys’ fees against Alizadeh in this action, and we are
affirming the trial court’s judgment in Labantschnig’s favor on all points. See Lehman, 608
S.W.3d at 741 (noting “[o]ur court may award appellate attorney fees ‘if they are based on a
written agreement that is the subject of the issues presented on appeal’”). Labantschnig has thus
prevailed on appeal and is entitled to an award of attorneys’ fees against Alizadeh. See id. We
grant the motion.
Although appellate courts have the “authority to allow and fix the amount of [attorneys’]
fees on appeal, we exercise this power with caution, believing in most cases that the trial court is
better equipped to hear evidence and argument on this issue and determine the reasonableness of
the fee requested.” Id. (internal quotation omitted). Because the trial court is in a better position
to determine a reasonable award of attorneys’ fees, we remand the cause to the trial court. See
id.; Pulaski, 428 S.W.3d at 734 (internal citation omitted).
Conclusion
The judgment of the trial court is affirmed. We remand the cause to the trial court for
determining an appropriate award of Labantschnig’s attorneys’ fees.
Rebeca Navarro-McKelvey, J.
Lisa P. Page, P.J., and Kurt S. Odenwald, J., concur.