A casino construction project goes bust. The financing lender is shut down by the FDIC. The FDIC and an entity that became a successor to some of the assets spun off of the shut-down bank moved against the guarantors on the loan.
The guarantors did what they could defensively. They had to concede that the loan was made, the borrower defaulted, and they had signed on as guarantors. All they had to rest on were allegations that the bank had represented the terms of the deal to them in a way flatly inconsistent with the way the deal was documented — that is, they alleged they were duped into giving their guaranties.
U.S. District Court Judge Donavan W. Frank (D. Minn.) didn’t buy it. The terms of the lending transaction were clear and unambiguous. Even assuming the guarantors’ version of events — that BankFirst employees basically told the guarantors that the loan papers and terms did not mean what they said — relying on such statements would have been unreasonable as a matter of law, the Court found, and, since the guarantors then had no defense, they lost on the plaintiff’s motion for summary judgment.
The next challenge for plaintiff OSM will be to enforce the judgment and collect the money, not a foregone conclusion even when dealing with well-heeled developers…