Wednesday, November 18, 2009
C.A.: Guaranty of Real Estate Loan Is Enforceable by Attachment
By a MetNews Staff Writer
An unsecured guaranty of a defaulting debtor’s promise to pay a loan secured by real estate is enforceable by attachment, the Fourth District Court of Appeal has ruled.
Div. Three Monday ordered publication of an Oct. 19 per curiam opinion by Justices William Rylaarsdam, Richard Aronson, and Raymond Ikola. The panel held that United Central Bank is entitled to a writ of mandate requiring reconsideration of a ruling denying its motion to attach properties owned by Louisa Chang in order to secure about $4 million in construction loans.
The bank sued Chang on the basis of three personal guaranties she executed in 2007 and 2008 as additional support for the loans, which were made to another borrower. The loans were secured by real property trust deeds, but Chang’s guaranties were not, and the guaranties provided that the creditor could enforce them without first proceeding against the debtor or the property.
Orange Superior Court Judge Randell L. Wilkinson denied the bank’s motion for a right to attach order and writ of attachment on the sole ground that the loans were secured by real property. The judge cited Code of Civil Procedure Sec. 483.010(b), which provides that an attachment order may not be issued for a claim secured by real property, absent a showing that the property is worth less than the balance due on the loans.
The appellate panel, however, said the trial judge failed to recognize that attachment was being sought to collect not on the construction loans, but on the guaranties, which were not secured by real estate.
A guaranty is a separate and independent obligation from that of the principal debt,” the panel explained. “...Though the three principal loans here were secured by real property, the guaranties signed by Chang were not. Thus the prohibition in section 483.010 against issuance of an attachment order for a claim secured by real property does not apply.”
The justices continued:
“Case law holds that a writ of attachment may issue on a guaranty, regardless of whether the principal loan is secured, so long as the guarantor has waived the right to require the creditor to proceed first against the security given for the primary obligation,” the court explained. On reconsideration, the panel said, the judge must grant the writ of attachment if all of the statutory requirements have been met.”
The case is United Central Bank v. Superior Court (Chang), 09 S.O.S. 6527.
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