Avnet, Inc. v. Wild, No. 14-2164 (8th Cir. 2015)
Annotate this CaseWild is the sole member of Braveheart, LLC, which is one of two members of another limited liability company, Catalyst. In 2008, Catalyst borrowed $500,000 from Laurus. Wild signed a personal guaranty as security for Catalyst's loan. The guaranty did not expressly extend Wild's promise to Laurus's "successors and assigns," but it also did not expressly prohibit assignment of the guaranty. Years later, Laurus assigned the Catalyst promissory note to Avnet as part of a forbearance agreement on a debt Laurus owed to Avnet. An attorney for Avnet contacted Catalyst demanding payment of the $500,000 loan plus interest. When Catalyst did not make any payments, Avnet's attorney contacted Wild and demanded that he honor his personal guaranty. When Wild did not honor the guaranty, Avnet filed suit. Catalyst did not respond; a $770,065.80 default judgment entered against the company. Wild contended his guaranty was a "special guaranty" (directed solely to a specific creditor) rather than a "general guaranty" and that a special guaranty could not be assigned under Iowa law. After examining Iowa law, the district court determined the Iowa Supreme Court would allow enforcement of Wild's personal guaranty by Avnet. The Eighth Circuit affirmed.
Court Description: Bye, Author, with Beam and Benton, Circuit Judges] Civil case - Suretyship and Guaranty. The District Court did not err in determining that Iowa courts would adopt the rule set forth in Restatement (Third) of Suretyship and Guaranty Section 13, which generally allows a creditor's assignee to enforce a guaranty even if it would have traditionally been considered a special guaranty under common law; none of the exceptions contained in Section 13 applied, and the district court did not err in enforcing defendant's guaranty.
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