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Bank of America, N.A. v. Fay

Superior Court of Rhode Island

October 22, 2018

BANK OF AMERICA, N.A., Plaintiff,
v.
TIMOTHY G. FAY and DAVID N. PATRICK, Defendants.

         Providence County Superior Court

          For Plaintiff: Richard L. Gemma, Esq.

          For Defendant: Timothy J. Morgan, Esq.; W. Kenneth O'Donnell, Esq.

          DECISION

          SILVERSTEIN, J.

         Before this Court is Plaintiff Bank of America, N.A.'s (Plaintiff or BOA) motion for summary judgment and entry of final judgment against Defendants Timothy G. Fay (Fay) and David N. Patrick (Patrick) (collectively, Defendants). On June 29, 2018, this Court found Defendants liable to BOA as Guarantors of a note executed by Stonestreet Hospitality Realty Company, LLC (Stonestreet or Borrower) and delivered to BOA, but declined to assign a value to the debt. BOA now seeks to find Defendants jointly and severally liable in the amount of $5, 022, 003.67 as of April 30, 2018, plus interest, as adjudicated by the Connecticut Superior Court on May 15, 2018 (the Connecticut Proceeding). Bank of America, N.A. v. Stonestreet Hospitality Realty Company, LLC et al., Docket No. KNLCV166026981S. The Defendants have objected to the motion. The sole issue before this Court is the amount due under this guaranty. Jurisdiction is pursuant to G.L. 1956 § 8-2-13.

         I Facts and Travel

         Fay and Patrick are residents of Rhode Island, as well as principals and collective one hundred percent owners of Stonestreet, a Limited Liability Company organized under the laws of Connecticut. Fay is the majority owner and manager of Stonestreet with a seventy percent interest; Patrick owns the remaining thirty percent. BOA is a national banking association organized under federal law with a place of business in Providence, Rhode Island.

         On May 15, 2008, Stonestreet executed and delivered a promissory note (Note) in the amount of $21, 808, 000, secured by a first mortgage on a 176 room Hyatt Place Mohegan Sun Hotel, in Montville, Connecticut (the Property). (Pl.'s Compl. Ex. A, Promissory Note.) Borrower contemporaneously executed and delivered a Senior Construction and Interim Loan Agreement (the Loan Agreement) to BOA in connection with the Note.[1] Also on May 15, 2008, Defendants executed and delivered a personal guaranty (Guaranty) to BOA in connection with the Loan Agreement. The Guaranty was executed in Rhode Island and included a choice-of-law provision indicating that the agreement was to be governed, in all respects, by Rhode Island law.[2]

         On November 21, 2014, payment of the Note came due in full under the terms of the Loan Agreement but payment was not made. (Pl.'s Compl. ¶ 9.) Accordingly, BOA made a demand for immediate payment from Stonestreet and Guarantors. Id. On September 2, 2015, BOA, Stonestreet, and Guarantors entered into a loan forbearance agreement (the Forbearance Agreement), which designated December 15, 2015 as the new maturity date for the Note and provided that the Guaranty remain enforceable and in effect. (Pl.'s Compl. Ex. D, Forbearance Agreement.) Borrower and Guarantors failed to repay the Note by the new maturity date. Id. ¶ 14.

         On May 31, 2016, BOA filed a complaint in Connecticut Superior Court (Connecticut Court) to foreclose its mortgage on the Property. On September 25, 2017, the Connecticut Court granted partial summary judgment in favor of BOA, finding that Stonestreet owed $23, 108, 768.17 to BOA as of September 25, 2017.[3] See Bank of America, N.A. v. Stonestreet Hospitality Realty Company, LLC, CV 166026981S, 2018 WL 2208002 (Conn. Super. Ct. Apr. 20, 2018). Ownership of the Property transferred from Stonestreet to BOA on November 8, 2017 (the Transfer Date), memorialized by a Certificate of Foreclosure recorded by BOA. After conducting a two-day hearing on February 15 and 27, 2018, the Connecticut Court concluded the value of the Property on the Transfer Date was $18, 400, 000. Id. On May 15, 2018, the Connecticut Court found the deficiency due to BOA on the Note to be $5, 022, 003.67 as of April 30, 2018.[4]

         On April 12, 2016, BOA filed the within Complaint against Fay and Patrick in their capacity as Guarantors of the Note. On June 29, 2018, this Court granted partial summary judgment in favor of BOA, holding that Rhode Island law governed the Guaranty agreement and finding Defendants liable for the indebtedness under the Guaranty. However, this Court declined to assign a value to the debt. BOA now moves for summary judgment and entry of final judgment in their favor, asking that this Court hold Guarantors liable for the final amount of indebtedness as adjudicated by the Connecticut Court. BOA seeks the deficiency from Guarantors as adjudicated by the Connecticut Court, or $5, 022, 003.67 as of April 30, 2018, plus interest at BOA's prime rate plus 4% per annum, or $1, 255.50 per day. As of August 1, 2018, the indebtedness amounted to $5, 137, 230.76, using this calculation.

         II Standard of Review

         It is well-settled that "[s]ummary judgment is 'a drastic remedy,' and a motion for summary judgment should be dealt with cautiously." Estate of Giuliano v. Giuliano, 949 A.2d 386, 390-91 (R.I. 2008) (quoting Ardente v. Horan, 117 R.I. 254, 256-57, 366 A.2d 162, 164 (1976)). "[S]ummary judgment is appropriate when, viewing the facts and all reasonable inferences therefrom in the light most favorable to the nonmoving party, the [C]ourt determines that there are no issues of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Quest Diagnostics, LLC v. Pinnacle Consortium of Higher Educ., 93 A.3d 949, 951 (R.I. 2014) (internal quotation marks omitted) (alterations in original).

         '"[T]he moving party bears the initial burden of establishing the absence of a genuine issue of fact."' McGovern v. Bank of Am., N.A., 91 A.3d 853, 858 (R.I. 2014) (quoting Robert B. Kent et al., Rhode Island Civil Procedure § 56:5, VII-28 (West 2006)). Once this burden is met, the burden shifts to the nonmoving party to prove by competent evidence the existence of a genuine issue of fact. Id. The nonmoving party may not rely on '"mere allegations or denials in the pleadings, mere conclusions or mere legal opinions'" to satisfy its burden. D'Allesandro v. Tarro, 842 A.2d 1063, 1065 (R.I. 2004) (quoting Santucci v. Citizens Bank of R.I., 799 A.2d 254, 257 (R.I. 2002) (per curiam)).

         III Analysis

         Plaintiff asks this Court to find Guarantors liable for the amount adjudicated by the Connecticut Proceeding.[5] In furtherance of this position, Plaintiff submits six legal theories including (1) doctrine of merger, (2) res judicata, (3) collateral estoppel, (4) the Restatement of Law on Judgments, (5) judicial estoppel, and (6) the doctrine of judicial admission. Defendants object to Plaintiff's motion.

         A ...


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