Submitted: February 11, 2015.
Appeal from United States District Court for the Northern District of Iowa - Cedar Rapids.
For Avnet, Inc., Plaintiff - Appellee: Amy Lynn Reasner, Lynch & Dallas, Cedar Rapids, IA.
For David A. Wild, Defendant - Appellant: Gregg Geerdes, Iowa City, IA.
Before BYE, BEAM, and BENTON, Circuit Judges.
BYE, Circuit Judge.
David Wild appeals the district court's determination that a personal guaranty he executed as security for a loan could be enforced by the original creditor's assignee under Iowa law. We affirm.
David Wild is the sole member of a limited liability company called Braveheart Equity Holdings, LLC (Braveheart). Braveheart, in turn, is one of two members of another limited liability company called Catalyst Resources Group, LLC (Catalyst). In 2008, Catalyst borrowed $500,000 from Laurus Technologies, Inc. (Laurus). Wild signed a personal guaranty as security for Catalyst's loan. In relevant part, the personal guaranty provides as follows: " The undersigned [does] hereby personally guarantee . . . to Laurus Technologies, Inc, the Holder, full complete and timely performance by the Borrower [Catalyst], of all obligations of the Borrower under the foregoing Promissory Note." The personal 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.
Several years after making the loan, Laurus assigned the Catalyst promissory note to a company called Avnet, Inc., as part of a forbearance agreement on a debt Laurus owed to Avnet. After the assignment, an attorney for Avnet contacted Catalyst demanding payment of the $500,000 loan plus interest. When Catalyst did not make any payments on the loan, Avnet's attorney contacted Wild and demanded that he honor his personal guaranty.
When Wild did not honor his personal guaranty, Avnet filed a complaint in federal district court against both Catalyst and Wild. Avnet sought a judgment against Catalyst on the promissory note and a judgment against Wild on his personal guaranty. Catalyst did not respond to the suit, and eventually a default judgment was entered against the company in the amount of $770,065.80 (representing both the original $500,000 loan as well as accrued interest), plus post-judgment interest. Wild did respond to the suit. He contended his guaranty was a " special guaranty" (one directed solely to a specific creditor) rather than a " general guaranty" because it was only directed to Laurus. Wild further contended a special guaranty could not be assigned under Iowa law, and could only be enforced by the original creditor.
Avnet filed a motion for summary judgment. The disputed issue was whether the Iowa Supreme Court would follow the common law rule under which a special guaranty is not enforceable by a creditor's assignee, or would follow the rule set forth in the Restatement (Third) of Suretyship and Guaranty § 13 which generally allows a creditor's assignee to enforce a guaranty even if it would have traditionally been considered a special guaranty under the common law. After a thorough examination of Iowa law, the district court determined the Iowa Supreme Court would adopt § 13. The district court further held none of § 13's exceptions applied in ...