SCM NEWS & OPINIONS

Town & Country Bank v. Stevens, 2014 UT App 172, 332 P.3d 387 

As a matter of first impression, the Utah Court of Appeals adopted the Fifth Circuit’s rule that the discharge of a debtor in a reorganization proceeding does not affect a guarantor’s liability. The defendant – guarantors of a promissory note to the plaintiff bank – appealed the district court’s grant of partial summary judgment in favor of the bank. The guarantors argued that there were material facts in dispute regarding whether the guarantees were altered when the borrower created and commenced performance under a bankruptcy reorganization plan. Adopting the Fifth Circuit’s rule, the court rejected the guarantors’ argument that an existing dispute of fact precluded summary judgment because the issue was resolved as a matter of law.