William O. Harrison, Jr. v. Chase Bank of Texas, N.A.

• Court: Court of Appeals of Texas
• Decided: June 27, 2002
• Docket: 01-00-00664-CV
• Status: Published

Opinion

Opinion issued June 27, 2002

In The

Court of Appeals

For The

First District of Texas

NO. 01-00-00664-CV

WILLIAM O. HARRISON, JR., Appellant

V.

CHASE BANK OF TEXAS, N.A., Appellee

On Appeal from the 125th District Court

Harris County, Texas

Trial Court Cause No. 99-25878

O P I N I O N

The main issue in this case is whether a creditor's claim against a guarantor is released when the creditor withdraws its claim against the principal. Appellee Chase Bank of Texas, N.A. withdrew a contract claim from Lighthouse Bar and Grill's bankruptcy proceeding. The Bank then sued appellant William O. Harrison, Jr., the guarantor on a promissory note between the Bar and the Bank. Both the Bank and Harrison moved for summary judgment. The trial court granted the Bank's motion and denied Harrison's motion. We affirm.

Facts

In 1996, the Bar signed a note that is now owned by the Bank. Harrison guaranteed the note. The Bar then defaulted and filed for a chapter 11 reorganization. 11 U.S.C.S. §§ 1101-1174 (LEXIS 2000). The Bank filed a proof of claim in the chapter 11 proceeding, but later withdrew it, resulting in a discharge of the debt as to the Bar. The Bank sought repayment of the note directly from Harrison. When Harrison refused to repay, the Bank sued.

Procedural Facts

The trial court rendered summary judgment for the Bank. The Bank's ground for summary judgment was that Harrison was liable as a guarantor. The court also denied Harrison's motion for summary judgment. In it, Harrison argued two grounds: (1) the Bank had released him when it withdrew its claim against the Bar and (2) the guaranty agreement was ambiguous. In its response, the Bank claimed that, even if Harrison were not a guarantor, he was an accommodation maker.

Standard of Review

If both parties file competing motions for summary judgment and one is granted and the other overruled, the appellate court must consider all issues presented on appeal, including the propriety of the order overruling the losing party's motion. Jones v. City of Houston, 907 S.W.2d 871, 875 (Tex. App.--Houston [1st Dist.] 1995, writ denied). When a trial court's order granting a motion for summary judgment does not specify the ground or grounds relied on for the order, the summary judgment will be affirmed on appeal if any of the grounds is meritorious. Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 79 (Tex. 1989).

Issues Presented

Harrison raises four issues. In issue one, he repeats an argument from his motion for summary judgment, saying that the Bank released him from liability as a guarantor. Thus, this issue challenges the court's ruling on both motions for summary judgment. In issues two, three, and four, Harrison challenges the summary judgment by claiming that: the trial court rendered summary judgment on a ground not stated in the motion (issue two); he was not in fact an accommodation maker (issue three); and assuming he was at one time an accommodation maker, he ceased to be one when the note was extended without his signature (issue four).

Guarantor Liability

In issue one, Harrison asserts that once a claim against a debtor is discharged, any claim against the guarantor of the debt is also discharged. We disagree. It is true that a guarantor's liability on a debt is normally measured by the principal's liability. W. Bank Downtown v. Carline, 757 S.W.2d 111, 113 (Tex. App.--Houston [1st Dist.] 1988, writ denied). However, a guarantor may agree to a more extensive or limited liability. Id.

Harrison expressly agreed to assume a more extensive liability as a guarantor. Numerous provisions in the guaranty agreement impose this extended liability:

C. Whenever any indebtedness, or any renewal thereof, guaranteed hereunder shall become due and remain unpaid, the Guarantors, jointly and severally, will pay, on demand . . . the amount due thereon to the Lender . . . and it shall not be necessary for the Lender, in order to enforce such payment by the Guarantors, to first institute suit or exhaust its remedies against Borrower or others liable on such indebtedness, or to enforce its rights against any security which shall have been given the Lender to secure such indebtedness;

D. Lender may at any time and from time to time . . . settle or compromise with the Borrower, or any other person primarily or secondarily liable with the Borrower, the Guaranteed Indebtedness or any renewal or extension thereof;

E. No failure, omission or delay on the part of the Lender in exercising any rights hereunder or in taking any action to collect or enforce payment of any obligation to which this Guaranty applies or in enforcing observance or performance of any agreement, covenant, term or condition to be performed or observed under the Note and/or Security Instruments, either against the Borrower or any other person primarily or secondarily liable with the Borrower, shall operate as a waiver of any such right or in any manner prejudice the rights of Lender against the Guarantors;

F. The Guarantors waive any right to require Lender to (1) proceed against the Borrower, (2) proceed against or exhaust any security held by Lender for the payment of the Guaranteed Indebtedness, or (3) pursue any other remedy that Lender has or to which it may be entitled;

. . . .

H. The liability of the Guarantors shall remain and continue in full force and effect notwithstanding (1) the nonliability of the Borrower for any reason whatsoever for the payment of the Guaranteed Indebtedness or any part thereof, (2) the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property described in the Security Instruments, marshalling [sic] of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or any similar proceeding affecting, Borrower or any of its assets, (3) the release of the Borrower from the observance of any of the agreements, covenants, terms or conditions contained in the Note and/or Security Instruments by operation of law, or (4) any defenses or rights of set-off or counterclaim which Borrower may have or assert . . . .

In his brief, Harrison does not discuss these portions of the agreement. The Bank argues that this language binds Harrison as a guarantor despite the Bank's withdrawal of its proof of claim against the Bar in the chapter 11 proceeding. We agree with the Bank and hold that the trial court properly rendered summary judgment on this ground. Because of our disposition of issue one, it is unnecessary to reach the remaining issues, which present alternate grounds for summary judgment.

Conclusion

We affirm the judgment of the trial court.

Frank C. Price ⁽¹⁾

Justice

Panel consists of Justices Mirabal, Nuchia, and Price.

Do not publish. Tex. R. App. P. 47.

1.

The Honorable Frank C. Price, former Justice, Court of Appeals, First District of Texas at Houston, participating by assignment.