Judgment rendered April 10, 2024. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 55,533-CW
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
ORIGIN BANK Applicant
versus
JPS AERO, L.L.C., JPS AVIATION, Respondent L.L.C., K. PAUL BULLOCK, AND MARGARET L. BULLOCK
On Application for Writs from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 2020-1228
Honorable Robert C. Johnson, Judge
OFFICE OF W. KYLE GREEN, LLC Counsel for Applicant By: William Kyle Green
DELAWARE REGISTRY LTD Agent for JPS Aero, LLC
JASON P. BULLOCK Agent for JPS Aviation, LLC
SHOTWELL, BROWN, & SPERRY, APLC Counsel for Respondent, By: Clarence Allan Martin, III K. Paul Bullock
MARGARET BULLOCK In Proper Person
Before COX, STEPHENS, and ELLENDER, JJ. STEPHENS, J.,
This writ grant to docket arises from the Fourth Judicial District,
Ouachita Parish, the Honorable Robert C. Johnson, judge, presiding.
Plaintiff, Origin Bank, seeks review of the trial court’s judgment denying its
motion for partial summary judgment in its action to collect on a deficiency
judgment from defendant, K. Paul Bullock, a commercial guarantor for the
principal debtor, JPS Aero, L.L.C. For the following reasons, we grant the
writ, reverse the trial court’s judgment denying partial summary judgment,
and render judgment granting summary judgment in favor of Origin Bank.
FACTS AND PROCEDURAL HISTORY
On November 22, 2013, Jason Paul Bullock, as manager and member
of JPS Aviation, L.L.C. (“JPS Aviation”), executed and signed an Aircraft
Security Agreement wherein JPS Aero, L.L.C. (“JPS Aero”) was identified
as the debtor/borrower and assignor/guarantor. JPS Aero assigned a security
interest in collateral to secure its indebtedness to Community Trust Bank
(now Origin Bank). The collateral outlined in the security agreement was a
2013 King Air 250 B200GT bearing F.A.A. registration number N5087G,
together with its engines, all avionics, log books, attachments, etc. On the
same day Jason Bullock executed and signed the security agreement, Jason
Bullock executed a promissory note (“Note 1”) in favor of Origin Bank in
the original amount of $3,866,199. The terms of Note 1 dictated that the
first payment on the note was due on January 1, 2014, with the final
payment due on December 1, 2018.
On September 3, 2014, K. Paul Bullock (“K. Paul”), a member of JPS
Aero, allegedly signed a commercial guaranty in which he agreed to pay any
and all outstanding debts incurred by JPS Aero “arising from any and all present and future loans…that Borrower individually or collectively…owes
or will owe or incur in favor of Lender.”1
As manager of JPS Aviation and on behalf of JPS Aero, Jason
Bullock executed another promissory note (“Note 2”) in the original amount
of $75,250, on February 10, 2017. This note provided that the first payment
be due on March 10, 2017, with all subsequent payments payable on the
same day of each successive month until paid in full, and that the final
payment be due on February 10, 2022.
On December 31, 2017, K. Paul terminated his ownership of and
membership in JPS Aero and sold these interests to Jason Bullock and
Margaret L. Bullock. K. Paul later notified Origin Bank via letter on August
28, 2018, that he was terminating any outstanding commercial guaranties as
to JPS Aero.
Origin Bank filed suit to collect when JPS Aero failed to make several
payments on Note 1 and Note 2. In its petition, Origin Bank asserted that
the payment due on December 1, 2018, for Note 1 was never made despite
amicable demand. Origin Bank elected to mature Note 1 in its entirety
pursuant to its terms. Furthermore, Origin Bank also asserted that payments
due on January 10, 2020, February 10, 2020, March 10, 2020, and April 10,
2020, for Note 2 were not made. According to the terms of Note 2, Origin
Bank chose to mature Note 2 in its entirety.
Because of its inability to pay on both promissory notes, JPS Aero
confessed judgment for purposes of foreclosure and acknowledged
indebtedness to Origin Bank up to the full amount of indebtedness. As a
1 K. Paul alleges that he does not remember executing this Commercial Guaranty.
2 result, the 2013 King Air 250 was sold at a sheriff’s sale in Ouachita Parish.
The sale of the aircraft resulted in a credit of $1,075,001 being applied to the
amount owed to Origin Bank effective on December 2, 2020.
On July 21, 2021, Origin Bank filed a petition for deficiency
judgment and named as defendants JPS Aero, JPS Aviation, K. Paul, and
Margaret L. Bullock. In the petition, Origin Bank alleged that the
defendants owed $3,382,986.69, less a credit of $1,075,001, as borrowers
and guarantors of the debts incurred by JPS Aero.
Origin Bank filed a motion for partial summary judgment on
November 4, 2021, and included in the motion an affidavit from Bryan
Burgess, an authorized representative of Origin Bank. Prior to the summary
judgment hearing, the trial court sustained K. Paul’s objection to Burgess’
affidavit submitted by Origin Bank for the purpose of “authenticating” the
commercial guaranty allegedly signed by K. Paul. Because it struck the
affidavit, the trial court found that none of the documents attached could be
“authenticated,” including the commercial guaranty allegedly signed by K.
Paul. Because the commercial guaranty could not be “authenticated,” the
trial court decided it was inadmissible evidence in support of Origin Bank’s
motion. Without the commercial guaranty as evidence, the trial court ruled
that Origin Bank could not meet its burden of proof on summary judgment
and denied Origin Bank’s motion for partial summary judgment.
Following the trial court’s denial of Origin Bank’s summary judgment
motion, the bank sought supervisory review, arguing that the trial court erred
in sustaining K. Paul’s objection to the affidavit and in not considering the
evidence submitted in support of the motion for partial summary judgment.
3 This Court granted the application for review and issued the following
findings and directions:
The requirement that affidavits be based on personal knowledge is satisfied when the affiant is qualified to identify business records as such. La. C.C.P. art. 967; Bank of Am., N.A. v. Green, 52,044 (La. App. 2 Cir. 5/23/18), 249 So. 3d 219. So considering, we find that the trial court erred in excluding the affidavit of Bryan Burgess as support for applicant’s motion for partial summary judgment. The trial court’s order sustaining the objection and denying the motion for partial summary judgment is reversed. The matter is remanded for the trial court’s reconsideration of applicant’s motion for partial summary judgment with consideration of Bryan Burgess’ affidavit and attachments as proper summary judgment evidence. See also, Custom-Bilt Cabinet & Supply, Inc. [supra].
After remand, the trial court reheard arguments on Origin Bank’s
motion for partial summary judgment on April 24, 2023. At the rehearing,
Origin Bank argued that K. Paul is liable for payment as a guarantor/surety
for all debts incurred by JPS Aero prior to and during the life of the
commercial guaranty. Origin Bank contended that K. Paul signed a
commercial guaranty on September 3, 2014, and, the commercial guaranty
obligated K. Paul to pay the outstanding debts in Notes 1 and 2 owed by JPS
Aero to Origin Bank. The bank further urged that a lender need only show
proof of the existence of a principal debt and the guarantor’s signature upon
a guaranty agreement. Furthermore, the Civil Code requires only that a
guaranty be express and in writing, it need not be in authentic form. Origin
Bank argued that no genuine issue of material fact existed, and that summary
judgment in favor of Origin Bank and against K. Paul was appropriate.
In opposition, K. Paul argued that he was not responsible for the
payment demanded because the demand followed the sale of his interest in
JPS Aero and the termination of the commercial guaranty. K. Paul also
disputed but failed to specifically deny that he executed the commercial 4 guaranty for the indebtedness incurred by JPS Aero. Furthermore, K. Paul
argued that no loan number from Note 1 and/or Note 2 existed on the
commercial guaranty so the guaranty was not applicable to Notes 1 and 2.
On May 19, 2023, the trial court issued its written ruling and signed a
judgment in accordance therewith on June 15, 2023, denying Origin Bank’s
motion for partial summary judgment. In its written ruling, the trial court
claimed that it could not consider the commercial guaranty agreement, and
found that a genuine issue of material fact existed as to whether the
commercial guaranty at issue covered the debts of Notes 1 and 2. The court
reasoned that this was due to the fact that the guaranty was established after
Note 1 but before Note 2 was executed. The trial court further concluded
that, where the intentions of the parties to a contract cannot be adequately
discerned from the contract as a whole, the facts and circumstances
surrounding the parties at the time of the contract are a relevant subject of
inquiry, but this inquiry is improper on a motion for summary judgment.
Accordingly, the trial court ruled that the intent of the parties as to which
debts were secured was a genuine issue of material fact.
The trial court also ruled that the extent of any liability under the
commercial guaranty was also at issue because K. Paul argued that he
unilaterally terminated the guaranty by letter dated August 28, 2018, and the
first missed payment did not occur until December 1, 2018. “This, [K. Paul
argued], is a genuine issue as it relieves him of any liability because the
guaranty agreement states that a termination received before any payments
are incurred and subsequently unpaid is effective.” The trial court noted that
it “finds it convenient that, though the signature on both the guaranty and
termination appear to be the same, [K. Paul] cannot recall executing the 5 guaranty for which he argues was properly terminated. Nevertheless, the
Court does not pretend to possess the skills and expertise of a handwriting
expert.”
Lastly, the trial court ruled that the fact that the parties disagree was a
genuine issue of material fact:
Origin argues that [K. Paul] is responsible for the debt based on the guaranty agreement, [K. Paul] argues that, based on the termination, he is not. This is the ultimate genuine issue of material fact because, regardless of whether the Guaranty is authentic, the effectiveness of the alleged termination is outcome determinative of Origin’s entire case against [K. Paul]. Origin failed to object to the alleged termination, so the Court must consider it. La. C.C.P. art. 966(D)(2). In doing so, the Court is inclined to agree with the defendant; and based on the argument and evidence presented, reasonable minds could reach more than one conclusion. Accordingly, Origin’s Motion for Partial Summary Judgment must be denied.
Following the trial court’s judgment, Origin Bank timely filed a writ
application with this Court. Following review of the application, this Court
granted the writ to docket.
DISCUSSION
In its first assignment of error, Origin Bank contends that the trial
court erred in finding a genuine issue of material fact concerning the
authenticity of K. Paul’s commercial guaranty. In support of this contention,
Origin Bank argues that K. Paul’s general denial in his answer and affidavit
filed with his opposition to the motion for partial summary judgment are
insufficient to create a denial of his signature on the commercial guaranty.
Next, Origin Bank asserts that the trial court erred in its determination that
the alleged termination of K. Paul’s commercial guaranty created a genuine
issue of material fact that could relieve K. Paul of any liability pursuant to
the plain language of the commercial guaranty and Louisiana law. Lastly, 6 Origin Bank’s third assignment of error suggests that the trial court erred in
its finding of a genuine issue of material fact due to the commercial guaranty
being executed after Note 1 but before Note 2 because the commercial
guaranty is a continuing guaranty and requires no examination of the intent
of the parties pursuant to La. C.C. art. 2046.2
A motion for summary judgment is a procedural device used when
there is no genuine issue of material fact for all or part of the relief prayed
for by a litigant. City of Ruston v. Womack & Sons Constr. Grp., Inc.,
55,328 (La. App. 2 Cir. 11/15/23), 374 So. 3d 311, writ denied, 24-00086
(La. 3/5/24); Schultz v. Guoth, 10-0343 (La. 1/19/11), 57 So. 3d 1002. The
procedure is favored and shall be construed to secure the just, speedy, and
inexpensive determination of actions. La. C.C.P. art. 966(A)(2).
A motion for summary judgment shall be granted if the motion,
memorandum, and supporting documents show there is no genuine issue as
to material fact and the mover is entitled to judgment as a matter of law. La.
C.C.P. art. 966(A)(3). If the mover will not bear the burden of proof at trial
on the issue that is before the court on the motion for summary judgment,
the mover’s burden on the motion does not require him to negate all
essential elements of the adverse party’s claim, action, or defense, but rather
to point out to the court the absence of factual support for one or more
elements essential to the adverse party’s claim, action, or defense. La.
C.C.P. art. 966(D)(1). The burden is on the adverse party to produce factual
2 When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. La. C.C. art. 2046. 7 support sufficient to establish the existence of a genuine issue of material
fact or that the mover is not entitled to judgment as a matter of law. Id.
A genuine issue of material fact is one as to which reasonable persons could
disagree; if reasonable persons could reach only one conclusion, there is no
need for trial on that issue and summary judgment is appropriate. Maggio v.
Parker, 17-1112 (La. 6/27/18), 250 So. 3d 874; Jackson v. City of New
Orleans, 12-2742 (La. 1/28/14), 144 So. 3d 876, cert. denied, 574 U.S. 869,
135 S. Ct. 197, 190 L. Ed. 2d 130 (2014); Springbok Royalty Partners, LLC
v. Cook, 54,788 (La. App. 2 Cir. 11/16/22), 351 So. 3d 850, writ denied, 22-
01832 (La. 2/14/23), 355 So. 3d 614; City of Ruston, supra. In determining
whether an issue is genuine, a court should not consider the merits, make
credibility determinations, evaluate testimony, or weigh
evidence. Springbok, supra; City of Ruston, supra.
Appellate courts review motions for summary judgment de novo,
using the same criteria that govern the district court’s consideration of
whether summary judgment is appropriate. Peironnet v. Matador Res. Co.,
12-2292 (La. 6/28/13), 144 So. 3d 791; Springbok, supra; City of Ruston,
supra.
Contracts of guaranty or suretyship are subject to the same rules of
interpretation as contracts in general. Wooley v. Lucksinger, 09-0571 (La.
4/1/11), 61 So. 3d 507; Fleet Fuel Inc. v. Mynex Inc., 38,696 (La. App. 2
Cir. 6/23/04), 877 So. 2d 234; Everest Stone LLC v. Louisiana S. Stone,
54,437 (La. App. 2 Cir. 4/13/22), 337 So. 3d 641. When the words of a
contract are clear and explicit and lead to no absurd consequences, no
further interpretation may be made in search of the parties’ intent. La. C.C.
art. 2046. 8 Suretyship is an accessory contract by which a person binds himself to
a creditor to fulfill the obligation of another upon the failure of the latter to
do so. La. C.C. art. 3035. Suretyship may be established for any lawful
obligation, which, with respect to the suretyship, is the principal obligation.
The principal obligation may be subject to a term or condition, may be
presently existing, or may arise in the future. La. C.C. art. 3036. Suretyship
must be express and in writing. La. C.C. art. 3038. Suretyship is established
upon receipt by the creditor of the writing evidencing the surety’s obligation.
The creditor’s acceptance is presumed and no notice of acceptance is
required. La. C.C. art. 3039.
Suretyship may be qualified, conditioned, or limited in any lawful
manner. La. C.C. art. 3040. A commercial suretyship is one in which: (1)
the surety is engaged in a surety business; (2) the principal obligor or the
surety is a business corporation, partnership, or other business entity; (3) the
principal obligation arises out of a commercial transaction of the principal
obligor; or (4) the suretyship arises out of a commercial transaction of the
surety. La. C.C. art. 3042. A surety is liable to the creditor for the full
performance of the obligation of the principal obligor, without benefit of
division or discussion, even in the absence of an express agreement of
solidarity. La. C.C. art. 3045.
The obligations of a surety are extinguished by the different manners
in which conventional obligations are extinguished. La. C.C. art. 3058. A
surety may terminate the suretyship by notice to the creditor. The
termination does not affect the surety’s liability for obligations incurred by
the principal obligor, or obligations the creditor is bound to permit the
principal obligor to incur at the time the notice is received, nor may it 9 prejudice the creditor or principal obligor who has changed his position in
reliance on the suretyship. La. C.C. art. 3061. The law is well settled that a
continuing guaranty remains in force until revoked by the guarantor, or its
effectiveness is extinguished in some other mode recognized by law.
Custom-Bilt Cabinet & Supply, Inc. v. Quality Built Cabinets, Inc., 32,441
(La. App. 2 Cir. 12/8/99), 748 So. 2d 594.
In the case of termination of the suretyship, notification that the
suretyship is being terminated is necessary. First, it provides a point of
reference from which one can determine what obligations the surety has
incurred. Second, it places the creditor on notice that the surety will no
longer be bound for future obligations of the principal debtor. This allows
the creditor to make an informed decision as to whether he will continue to
extend funds to the principal debtor. Custom-Bilt Cabinet, supra. This
termination or discontinuance does not affect the surety’s liability for
obligations already incurred; the discontinuance relieves the surety only of
liability for future loans. Bergman v. Nicholson Mgmt. & Consultants, Inc.,
594 So. 2d 491 (La. App. 4 Cir. 1/30/92), writ denied, 600 So. 2d 646 (La.
6/19/92), citing First Acadiana Bank v. Bieber, 582 So. 2d 1293 (La. 1991).
An act under private signature is regarded prima facie as the true and
genuine act of a party executing it when his signature has been
acknowledged, and the act shall be admitted in evidence without further
proof. La. C.C. art. 1836. An act under private signature need not be
written by the parties, but must be signed by them. La. C.C. art. 1837. A
party against whom an act under private signature is asserted must
acknowledge his signature or deny that it is his. La. C.C. art. 1838. A party
who refuses to either acknowledge or deny his signature should be held to 10 have acknowledged it. 5 Saul Litvinoff, Louisiana Civil Law Treatise: The
Law of Obligations § 12.31 (2d ed. 2001). A general denial is insufficient to
constitute denial of a signature. Mirandona Bros. v. Danos, 56 So. 2d 159
(La. App. Orl. 1952). An endorser who does not specifically deny his
signature on a note will be considered as having admitted the signature. The
defendant cannot avoid the effect of this rule and prevent recovery on a note
by simply saying that he does not know if this is the same note that he
endorsed, which is to say that he does not know his own signature. Maddox
v. Robbert, 165 La. 694, 115 So. 905 (1928).
In case of denial, any means of proof may be used to establish that the
signature belongs to that party. La. C.C. art. 1838. Our jurisprudence has
established that these means include, but are not limited to, the testimony of
witnesses who saw the party write the signature in controversy, or testimony
by witnesses who know the signature of the party, or by comparison of
signatures. In the last instance, when a signature has been denied, the court
may examine and compare the denied signature with other admitted
signatures of the denying party. Masonite Corp. v. Serv. Door & Millwork,
LLC, 14-1035, p. 5 (La. App. 3 Cir. 4/1/15), 162 So. 3d 702, 706, writ
denied, 15-0860 (La. 6/5/15), 171 So. 3d 951, citing Fleet Fuel, Inc., 38,696
at pp. 9-10, supra at 240.
Origin Bank argues that the trial court erred in finding a genuine issue
of material fact concerning the authenticity of K. Paul’s commercial
guaranty. First, Origin Bank asserts that K. Paul did not specifically deny
his signature but instead claimed he had “no recollection of the execution of
the Commercial Guaranty,” and K. Paul’s failure to acknowledge or deny
11 the signature should be considered as an admission that it is his signature on
the guaranty. We agree.
Because the commercial guaranty was executed under private
signature and is therefore not self-authenticating, K. Paul is required to
either definitively acknowledge or deny his signature on the document. K.
Paul may not avoid this requirement simply by stating he has no recollection
of executing the guaranty. Because of this attempted evasion, we regard the
commercial guaranty as being acknowledged by K. Paul. Similarly, the trial
court could have compared K. Paul’s alleged signature on the commercial
guaranty to the signatures on K. Paul’s affidavit and notification of
termination. This comparison is a proper form of proof under our
jurisprudence. In fact, the trial court even stated that it found “convenient
that, though the signature on both the guaranty and termination appear to be
the same, [K. Paul] cannot recall executing the guaranty for which he argues
was properly terminated.” Indeed, it is “convenient” that K. Paul cannot
recall signing the commercial guaranty even though he argues he effectively
terminated this same document. Given these reasons, we conclude no
genuine issue of material fact exists as to the validity and authenticity of the
commercial guaranty, and the trial court erred in finding otherwise.
Because the commercial guaranty is valid and authentic, we also find
that no genuine issues of material fact exist as it pertains to K. Paul’s
liability for Notes 1 and 2. The Louisiana Civil Code provides for and
Louisiana courts have routinely enforced continuing commercial guaranties
that do not specifically detail within their four corners every principal debt
that the guaranties cover. See Custom-Bilt Cabinet, supra. So long as the
continuing guaranty is clear that the guarantor intends to secure any and all 12 principal debts existing at the time of the execution of the guaranty and
incurred during the life of the guaranty, the continuing guaranty is valid. In
this case, the commercial guaranty states:
Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower’s obligations under the Note and the Related Documents.
....
This is a “Continuing Guaranty” under which guarantor agrees to guarantee the full and punctual payment, performance and satisfaction of the indebtedness of Borrower to Lender, now existing or hereafter arising or acquired. On an open and continuing basis. Accordingly, any payments made on the Borrower’s Indebtedness will not discharge or diminish Guarantor’s obligations and liability under this guaranty for any remaining and succeeding Indebtedness even when all or part for the outstanding Indebtedness may be a zero balance from time to time. To the extent that Guarantor is or might become a member/owner of Borrower, Guarantor agrees that, notwithstanding the provisions of La. R.S. 12:1320, Guarantor shall be liable under this Guaranty for the Borrower’s Indebtedness.
K. Paul executed the commercial guaranty on September 3, 2014.
Note 1 existed at the time K. Paul signed the commercial guaranty, making
him liable for this “now existing” debt. Furthermore, Note 2 was executed
on February 10, 2017, and existed before the termination of the guaranty. K.
Paul terminated the guaranty on August 28, 2018. Despite termination of
the guaranty, the guarantor, in this case K. Paul, is liable for any principal
debts existing prior to the continuing commercial guaranty as well as those
incurred during the life of the guaranty. See First Acadiana Bank v. Bieber,
supra. K. Paul obligated himself as a surety to pay any existing debt and
any debt incurred during the existence of the commercial guaranty on behalf
of JPS Aero. Note 1 existed prior to the establishment of the commercial
13 guaranty, and Note 2 came into existence before K. Paul terminated the
commercial guaranty. While K. Paul is relieved from his obligation for any
future liability, the commercial guaranty makes clear that K. Paul is liable
for Note 1 and Note 2.
We also find K. Paul’s contention that he is not liable for Note 1 or
Note 2 because the commercial guaranty did not specifically reference Note
1 or Note 2 to be without merit. The language of the commercial guaranty is
clear and unambiguous: “Guarantor agrees to guarantee the full and punctual
payment… of the indebtedness of Borrower to Lender, now existing or
hereafter arising or acquired.” Whether the commercial guaranty made
specific references to loan numbers or promissory notes is irrelevant. Notes
1 and 2 clearly fall under the terms of the obligations “now existing or
hereafter arising or acquired.” Therefore, the trial court erred in finding that
a genuine issue of material fact existed as to K. Paul’s liability for Note 1
and Note 2 under the commercial guaranty.
CONCLUSION
For the reasons assigned, we grant Origin Bank’s writ application,
reverse the judgment of the trial court, and grant Origin Bank’s motion for
partial summary judgment against K. Paul Bullock. Costs of this appeal are
assessed to defendant, K. Paul Bullock.
WRIT GRANTED; JUDGMENT REVERSED.