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Contract – Personal Guaranty – No Upper Limit – N.Y. Law

An Alexandria U.S. District Court says defendant, a part owner of defendant ABC Management Technology Solutions LLC, is personally liable for debts ABC owes to plaintiff Ingram Micro Inc., based on the language of a personal guaranty signed by the part owner, even though he no longer has interest in ABC and the guaranty has no upper limit on the amount he may owe.

Defendant Ali Beheshtin is the sole remaining defendant, and Ingram’s breach of guaranty claim against him is the sole remaining claim in the case. Beheshtin signed two copies of a personal guaranty agreement, one dated Dec. 14, 2007 and one dated Dec. 17, 2007. The personal guaranty states that Beheshtin “hereby unconditionally and irrevocably guarantees the full and prompt payment to Ingram when due, whether by acceleration or otherwise, of any and all indebtedness of ABC. The guaranty also defines indebtedness and requires defendant to indemnify Ingram from any claim or loss under the guaranty, including reasonable attorney’s fees and expenses.

Ingram allowed ABC to purchase equipment until ABC accumulated $640,000 in debt. In 2008, after a dispute among the owners of ABC, an agreement was reached whereby another part owner, Prosser, became ABC’s new majority owner. Beginning in late 2009, ABC defaulted on its monthly payments to Ingram. ABC filed for bankruptcy and the bankruptcy court lifted the automatic stay. On July 7, 2010, two consent judgments were entered in favor of Ingram, one against ABC and one against Prosser, each for $637,193.02. New York law controls.

The terms of the personal guaranty are clear and unambiguous. It states that ABC’s debt to Ingram may change over time, and no matter how extensive the debt may become, Beheshtin remains personally liable for the debt. This clearly stated intent of the parties must be given effect.

Beheshtin argues that 1) a personal guaranty with no upper limit is unenforceably vague; 2) the original Reseller Agreement indicates on its face that the “Credit Limit Amount Requested” is $30,000, setting a permanent cap on ABC’s potential debt; 3) the Reseller Update Form signed Nov. 14, 2008, requesting a credit line of $150,000, materially changed the terms of the agreement between Ingram and ABC and excused defendant from his guaranties; 4) the Reseller Update form, which put Ingram on notice that Beheshtin was no longer an owner of ABC, served as notice of termination of his personal guaranty; and 5) Beheshtin’s secretary contacted Ingram in July 2008 concerning his status as a guarantor and was told he was not liable under any personal guaranty.

None of these arguments provides a basis for defendant to escape his obligations.

Summary judgment for plaintiff.

Ingram Micro Inc. v. ABC Mmgt. Tech. Solutions LLC (Ellis, J.) No. 1:10cv222, Sept. 29, 2010; USDC at Alexandria, Va. VLW 010-3-507, 12 pp.

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