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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA real estate developer whose project had to be sold after the company defaulted on the mortgage is on the hook for nearly half the owed price based on a contract he signed as guarantor, the Indiana Court of Appeals affirmed.
George P. Broadbent obtained loans from Fifth Third Bank to construct a shopping center in Plainfield. The loans, totaling nearly $9 million, were opened in 2006. Broadbent executed a payment guarantee for the loans. Based on language in the contract, after the loans reached their extended maturity dates, Broadbent was only responsible for half of the outstanding balance of principle and accrued interest under the note.
Plainfield Village failed to repay the outstanding balance by the extended maturity dates, so the bank sought to foreclose on the mortgage. Nearly $7.4 million was due at this time. The parties found a buyer for the property and agreed a $4.4 million credit would be applied to the amount owed.
The trial court found Broadbent was responsible for half of the amount and calculated his responsibility as $3,134,169.03, plus interest. The judge took the outstanding balance of $7,534,169.03 and divided it by half. Against the half not guaranteed by Broadbent, the judge applied the $4.4 million credit, leaving a credit of $632,915.49 for Broadbent.
He appealed, claiming the contract was ambiguous and the judge misapplied the credit. But the appeals court found nothing ambiguous about the contract. Section 2 identifies his obligation to pay the bank upon the bank’s demand and Section 7 limits the amount that he must pay. The judges rejected his claim that the amount owed should be determined after the property sold.
They also affirmed how the lower court calculated his obligation. He again maintained that the $4.4 million credit should apply to the total $7.4 million, leaving an outstanding balance of nearly $3.2 million, meaning he was responsible for $1.59 million. But his proposal is contrary to the language of the contract, which says that any reduction of the liabilities shall be applied first to the portion of liabilities not guaranteed by Broadbent.
The case is George P. Broadbent, and Plainfield Village, LP v. Fifth Third Bank, 32A01-1602-MF-345.
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