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Ltd. v. Sodja

United States District Court, S.D. Texas, Houston Division

December 31, 2019

Ranch 620 Retail Partners, Ltd., Plaintiff,
v.
Richard Sodja & Molly Sodja, Defendants.

          MEMORANDUM OPINION & ORDER

          Gray H. Miller, Senior United States District Judge.

         Pending before the court is plaintiff Ranch 620 Retail Partners, Ltd.'s (“Ranch 620”) motion for summary judgment (Dkt. 3), defendants Richard Sodja and Molly Sodja's (“the Sodjas”) response (Dkt. 8), Ranch 620's sealed reply (Dkt. 10), and the Sodjas' sur-reply (Dkt. 15). Ranch 620 seeks summary judgment on its sole claim against the Sodjas for breach of contract, in addition to judgment for a sum certain of “$1, 195, 126.25, plus pre-judgment interest, attorneys' fees and costs, post-judgment interest until the judgment is paid, and costs of suit.” Dkt. 3 ¶ 14.

         Having considered the pleadings, the evidentiary record, and the applicable law, the court finds that Ranch 620's motion should be GRANTED as to liability, but that a hearing is required to determine the precise amount of damages.

         I. Background

         At issue in this case is a May 20, 2015 guaranty agreement signed by Richard Sodja and Molly Sodja, the guarantors, in favor of Ranch 620. Dkt. 3-1, Ex. 1-B. The guaranty was executed contemporaneously as consideration for a lease agreement, in which Ranch 620 is the landlord and CLA Austin Trails, LLC is the tenant. Dkt. 3-1, Ex. 1-A. The guaranty provides that the Sodjas are “absolutely and unconditionally” responsible for “performance and observance of all amounts to be paid and provisions of the Lease provided to be performed and observed by Tenant” in the “Event of Default under the Lease.” Dkt. 3-1, Ex. 1-B. There is no dispute that the guaranty is valid. Nor is there any real dispute that the tenant is in default.[1] The only dispute is how much the guarantors owe. According to Ranch 620, the Sodjas owe “$1, 195, 126.25, plus pre-judgment interest, attorneys' fees and costs, post-judgment interest until the judgment is paid, and costs of suit.” Dkt. 3 ¶ 14. According to the Sodjas, Ranch 620 began modifying the tenant's rent in late 2016. Dkt. 8 ¶ 11. The Sodjas claim that “Plaintiff's modification of the rent . . . inures to the benefit of the defendants as surety guarantors, ” and that this precludes summary judgment. Dkt. 8 at 8.

         II. Legal Standard

         Summary judgment is proper only when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Once the moving party has demonstrated the absence of a material fact issue, the non-moving party must ‘go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.'” Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.'” Id. (quoting Little, 37 F.3d at 1075). “[O]n summary judgment, ‘the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his or her favor.'” Waste Mgmt. of La., L.L.C. v. River Birch, Inc., 920 F.3d 958, 972 (5th Cir. 2019) (quoting Tolan v. Cotton, 572 U.S. 650, 656, 134 S.Ct. 1861, 188 L.Ed.2d 895 (2014) (per curiam)).

         III. Analysis

         The standard for Ranch 620 to prevail on the instant motion is as follows:

To prevail on summary judgment on a claim for breach of a guaranty, the plaintiff must establish (1) the existence and ownership of the guaranty, (2) the terms of the underlying contract, (3) the occurrence of the condition on which liability is based, and (4) the guarantor's failure or refusal to perform the promise.

Norris v. Texas Dev. Co., 547 S.W.3d 656, 659 (Tex. App.-Houston [14th Dist.] 2018, no pet.). See also Sunbelt Sav., FSB, Dallas, Tex. v. Birch, 796 F.Supp. 991, 995 (N.D. Tex. 1992) (citations omitted) (“Under Texas law, a plaintiff may recover upon a guaranty if he shows (1) that the defendant executed the guaranty, (2) that the underlying note is in default, (3) that the plaintiff is the present holder of the note and guaranty, and (4) that a certain balance is due and owing.”).[2]

         Here, there is no dispute that the guaranty, attached to Ranch 620's summary judgment motion as Exhibit 1-B, is valid, or that Ranch 620 is the owner of the guaranty. There is no dispute as to the terms of the underlying lease. Nor is there a genuine dispute that the tenant is in default. Although the Sodjas dispute in their sur-reply that any Event of Default has occurred, that argument is without merit. Ranch 620 has submitted evidence showing that no rent was paid in July 2019 or August 2019 (see Dkt. 10-1 ¶¶ 9, 10), and the Sodjas have not even addressed that contention, much less designated specific facts showing that there is a genuine dispute as to whether any rent is owed for those months. Boudreaux, 402 F.3d at 540. While the Sodjas claim that there were “monthly adjustments and payments of rent that left nothing owed when this case was filed” (Dkt. 8 at 1), the Sodjas do not dispute that the tenant was in default by at least July 26, 2019 (id. ¶ 17), and remained in default at the time the instant motion was filed (id. ¶ 18). Nor have the Sodjas alleged that any default occurring after July 2019 has been cured. That the tenant is presently in default-regardless of when default first occurred-is sufficient to trigger the Sodjas' liability. Finally, given that this suit was instigated to compel the Sodjas' performance as guarantors, there is no dispute that the Sodjas have failed to perform their promise. Accordingly, Ranch 620 has established all the elements required to prevail on its summary judgment motion.

         However, the Sodjas raise a number of suretyship defenses that they claim preclude summary judgment. The Fifth Circuit explains these defenses in the context of a “absolute and unconditional” guaranty-like the one at issue here-succinctly in United States v. Vahlco Corporation:

In an action to enforce a guaranty, the guarantor may assert as a defense that the terms of the guaranteed agreement have been altered materially. Under Texas law, the guarantor of a note is discharged from his obligation to answer for that debt if the creditor grants an extension of time for the payment of the note to the principal debtor. . . . These defenses, based upon changes to the underlying obligation and therefore changes to the guaranty, are termed suretyship ...

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