     Case: 15-20086   Document: 00513810814     Page: 1   Date Filed: 12/22/2016




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                  United States Court of Appeals
                                                                           Fifth Circuit
                                 No. 15-20086                            FILED
                                                                 December 22, 2016

WBCMT 2007 C33 OFFICE 9720, L.L.C.,                                 Lyle W. Cayce
                                                                         Clerk
             Plaintiff - Appellant

v.

NNN REALTY ADVISORS, INCORPORATED,

             Defendant - Appellee


                Appeal from the United States District Court
                     for the Southern District of Texas


Before JONES, DENNIS, and PRADO, Circuit Judges.
EDITH H. JONES, Circuit Judge:
      NNN Realty Advisors, Inc. (NNN Realty), defendant-appellee here,
persuaded the district court that its guaranty of financing for a commercial
project in Houston, Texas, was not activated despite a “part [of the Property]
becoming an asset in . . . a voluntary bankruptcy or insolvency proceeding of
Borrower[.]” Interpreting a complex set of financing documents, the district
court held after trial that the term “Borrower” in the guaranty refers
collectively to all of the numerous borrowing entities, not to each of them
individually. The current noteholder, plaintiff-appellant WBCMT 2007 C33
OFFICE 9720, L.L.C. (WBCMT) challenges the adverse judgment in its
breach-of-contract suit to recover on the guaranty.       We REVERSE and
RENDER judgment for WBCMT.
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                                No. 15-20086
                                      I.
      In June 2007, Wachovia Bank loaned $17.5 million to various borrowing
entities formed by investors for the sole purpose of owning tenant-in-common
interests in a Houston, Texas, office building complex (the Property). Each
borrowing entity is jointly and severally liable for all loan obligations. The
promissory note is secured in part by two agreements: (1) a Deed of Trust,
Security Agreement, and Fixture Filing, which encumbers the Property (the
Security Instrument); and (2) an Indemnity and Guaranty Agreement (the
Guaranty) executed by NNN Realty as Guarantor.              Through various
assignments, WBCMT acquired Wachovia Bank’s interests in the loan.
      The Guaranty references the individual borrowing entities as follows:
      WHEREAS, NNN Cypresswood Drive, LLC, NNN Cypresswood
      Drive 1, LLC, NNN Cypresswood Drive 3, LLC, NNN Cypresswood
      Drive 4, LLC, NNN Cypresswood Drive 5, LLC, NNN Cypresswood
      Drive 6, LLC, NNN Cypresswood Drive 7, LLC, NNN Cypresswood
      Drive 9, LLC, NNN Cypresswood Drive 10, LLC, NNN
      Cypresswood Drive 11, LLC, NNN Cypresswood Drive 12, LLC,
      NNN Cypresswood Drive 13, LLC, NNN Cypresswood Drive 14,
      LLC, NNN Cypresswood Drive 17, LLC, NNN Cypresswood Drive
      18, LLC, NNN Cypresswood Drive 19, LLC, and NNN Cypresswood
      Drive 20, LLC, each a Delaware limited liability company (as
      defined in the Security Instrument), the “Borrower”), have
      obtained a loan (the “Loan”) in the principal amount of Seventeen
      Million Five Hundred Thousand and No/100 Dollars
      ($17,500,000.00) from [Wachovia Bank.]

Notably, this recital contains a typographical error—a missing or extra
parenthesis in the phrase “(as defined in the Security Instrument), the
‘Borrower’).”
      The contracting parties agreed that additional parties could obtain
tenant-in-common interests in the Property and become part of “Borrower”
under the loan documents. Section 2.9 of the Security Instrument governs the
transfer of interests. And the Guaranty states that, upon a valid transfer
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                                 No. 15-20086
under section 2.9, “the Co-Owner Transferee [the additional party that
obtained an interest] shall be included in the defined term ‘Borrower’
hereunder[.]”
      Pursuant to these provisions, various “NNN Cypresswood Drive” entities
acquired tenant-in-common interests in the Property and were included in the
term “Borrower.” NNN Cypresswood Drive 25, LLC became one such entity
when it obtained a 3.305% interest in the Property and assumed the loan
obligations.
      A few years later, the borrowing entities were notified that they were in
default. Shortly thereafter, NNN Cypresswood Drive 25, LLC filed a voluntary
Chapter 11 bankruptcy petition and listed its 3.305% tenant-in-common
interest as an asset in the bankruptcy case. It is undisputed that “the Property
or any part thereof” thus became an asset in the voluntary bankruptcy case.
The lender then notified NNN Realty that it was “fully liable for all principal,
interest and other amounts which are due and owed.” This claim was based
on the penultimate paragraph of section 1 of the Guaranty, which provides in
relevant part:
      [NNN Realty] shall be fully liable for all principal, interest and
      other amounts which may be due and owning by Borrower under
      the Note, the Security Instrument and any other Loan Document
      from and after . . . the Property or any part thereof becoming [sic]
      an asset in (x) a voluntary bankruptcy or insolvency proceeding of
      Borrower[.]
      In the meantime, as the default remained uncured, WBCMT foreclosed
on and purchased the 96.695% interest in the Property owned by the non-
bankrupt borrowing entities for $6,925,000. WBCMT then obtained a lift-stay
order from the bankruptcy court and purchased NNN Cypresswood Drive 25,
LLC’s 3.305% interest at foreclosure for $305,184. WBCMT now owns 100% of
the Property, and the remaining deficiency at the date of foreclosures was
$14,605,545.06, plus expenses.
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                                 No. 15-20086
      On August 29, 2013, WBCMT sued NNN Realty, inter alia, for breach of
the Guaranty. WBCMT alleged that NNN Realty’s liability to pay arose when
NNN Cypresswood Drive 25, LLC’s 3.305% interest in the Property became an
asset in the investor’s bankruptcy. A week later, WBCMT moved for summary
judgment.
      NNN Realty responded that there was a material issue of fact as to
whether a liability-triggering event had occurred. Specifically, NNN Realty
asserted that “Borrower” is “a term defined in the Guaranty to be the collective
group of borrowers, not a single borrower,” because the word “and” connects all
of the borrowing entities listed in the Guaranty’s recital. Thus, according to
NNN Realty, when the Guaranty refers to “a voluntary bankruptcy . . .
proceeding of Borrower,” its plain terms mean “a bankruptcy proceeding filed
by all of the borrowers” collectively, not a single borrower. Consequently, the
Guaranty had not been triggered.
      WBCMT pointed out that the phrase “as defined in the Security
Instrument” appears before “Borrower” in the Guaranty’s recital, and the
Security    Instrument defines    the   borrowing    entities   “individually or
collectively” as “Borrower.” After the district court concluded, contrary to both
parties’ contentions, that the Guaranty’s definition of “Borrower” was
ambiguous, the case proceeded to a bench trial, in which the sole witness was
Greg Kaliman, who represented WBCMT in seeking to enforce the Guaranty.
Kaliman generally testified that interpreting “Borrower” to mean all borrowing
entities collectively would make the loan almost impossible to enforce, and that
no lender would make such a loan.
      Without relying on the testimony at trial, the district court rendered
judgment for NNN Realty. The court emphasized that the use of the word
“and” to connect the names of the borrowing entities “indicates that the term
‘Borrower’ refers to the full complement of entities.” The court rejected as
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                                  No. 15-20086
ambiguous the parenthetical reference to the Security Instrument in the
Guaranty’s recital “because it is unclear to what the parenthetical refers.”
Other than observing that the parenthetical appears grammatically to relate
to “Delaware limited liability company,” a term not defined in the Security
Instrument, the court expressed no other possible object of the Security
Instrument reference. In any event, the court concluded that the “Guaranty,
construed strictly and in favor of the Guarantor, defines ‘Borrower’ as all listed
NNN Cypresswood Drive entities.        As a result, NNN’s liability under the
Guaranty did not arise upon the bankruptcy filing by one entity[.]”
      WBCMT has appealed, asserting that in the Guaranty, “Borrower”
unambiguously refers to the borrowing entities either collectively or
individually.
                                       II.
A. Standard of Review
     Under Texas law, which, according to the loan documents, governs the
transaction, the interpretation of an unambiguous contract, including the
determination whether the contract is ambiguous, is a legal question reviewed
de novo.    E.g., Leasehold Expense Recovery, Inc. v. Mothers Work, Inc.,
331 F.3d 452, 456 (5th Cir. 2003). If the contract is ambiguous, then “the
district court’s findings of fact as to the intent of the parties are reviewed for
clear error.”    McLane Foodservice, Inc. v. Table Rock Rests., L.L.C.,
736 F.3d 375, 377 (5th Cir. 2013). Although the court conducted a bench trial,
none of the court’s dispositive findings depended on the testimony of WBCMT’s
witness or on extrinsic evidence concerning the transaction.
B. Analysis
     “The primary concern of contract interpretation under Texas law is to
ascertain the true intentions of the parties as expressed in the instrument.”
Weeks Marine, Inc. v. Standard Concrete Prods., Inc., 737 F.3d 365, 369 (5th
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                                  No. 15-20086
Cir. 2013). Texas courts thus “examine the entire contract in an effort to
harmonize and give effect to all provisions so that none is rendered
meaningless.” Id. A contract is unambiguous if it can be given “a definite or
certain legal meaning.” McLane Foodservice, Inc., 736 F.3d at 378. Ambiguity
does not arise simply because of a lack of clarity, or because the parties proffer
different interpretations of the contract. Id. Instead, a contract is ambiguous
“only if it is subject to two or more reasonable interpretations after applying
the pertinent canons of construction.” Id.; cf. Kern v. Sitel Corp., 517 F.3d 306,
309 (5th Cir. 2008) (“A contract, however, is ambiguous when its meaning is
uncertain and doubtful or it is reasonably susceptible to more than one
meaning.” (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983))).
Moreover, where the interpretation of a guaranty is in dispute, the guarantor
“is entitled to have his agreement strictly construed,” and “[w]here uncertainty
exists as to the meaning of a contract of guaranty, its terms should be given a
construction which is most favorable to the guarantor.” Coker, 650 S.W.2d at
394 n.1.
      Guided by these principles, we analyze the Guaranty in three parts.
First, we consider NNN Realty’s argument that the word “and,” which connects
the names of the borrowing entities in the recital, necessarily defines
“Borrower” as a collective entity. Second, we address WBCMT’s argument that
the phrase “as defined in the Security Instrument” modifies “Borrower” in the
Guaranty’s recital and thereby incorporates the Security Instrument’s
alternative definition of “Borrower” as a collective or individual entities
depending on the context. Finally, we examine how the term “Borrower” is
used throughout the Guaranty.          This analysis reveals that numerous
provisions of the Guaranty only make sense when “Borrower” refers to each
borrowing entity individually. From a holistic standpoint of interpretation,


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                                       No. 15-20086
“Borrower” refers, as WBCMT contends, to each borrowing entity individually
or collectively.
       1. The Relevance of “And”
       NNN Realty bases its entire argument in this case on the word “and” in
the definition of “Borrower.” In relevant part, the Guaranty’s recital states:
       WHEREAS, NNN Cypresswood Drive, LLC, NNN Cypresswood
       Drive 1, LLC, NNN Cypresswood Drive 3, LLC, NNN Cypresswood
       Drive 4, LLC, NNN Cypresswood Drive 5, LLC, NNN Cypresswood
       Drive 6, LLC, NNN Cypresswood Drive 7, LLC, NNN Cypresswood
       Drive 9, LLC, NNN Cypresswood Drive 10, LLC, NNN
       Cypresswood Drive 11, LLC, NNN Cypresswood Drive 12, LLC,
       NNN Cypresswood Drive 13, LLC, NNN Cypresswood Drive 14,
       LLC, NNN Cypresswood Drive 17, LLC, NNN Cypresswood Drive
       18, LLC, NNN Cypresswood Drive 19, LLC, and NNN Cypresswood
       Drive 20, LLC, each a Delaware limited liability company (as
       defined in the Security Instrument), the “Borrower”), have
       obtained a loan (the “Loan”) in the principal amount of Seventeen
       Million Five Hundred Thousand and No/100 Dollars
       ($17,500,000.00) from [Wachovia Bank.]
As was noted above, the district court found that the word “and” is dispositive.
The court stated that “[t]he first sixteen entities are connected with the final
listed entity only by the word ‘and’—not ‘and/or.’”                  Therefore, the court
reasoned, “[t]he parties’ use of the conjunctive indicates that the term
‘Borrower’ refers to the full complement of entities.” NNN Realty echoes the
district court. 1



       1 It bears noting that NNN Realty’s position, that it only agreed to be liable when all
borrowing entities act collectively, misstates the nature of the investors’ deal. NNN Realty
had to be aware of the borrowing entities’ tenant-in-common agreement, which expressly
provides that the investor entities “do not intend by this Agreement or otherwise to create a
partnership or joint venture among themselves.” ROA.370. Indeed, NNN Realty’s own brief
refers to the borrowing entities as “individual” and “separate” entities. Red Br. at 4–5.
Despite numerous provisions throughout the investment transaction documents, which we
need not recite here, that bind the investors either as individual entities or collectively, as
the context may require, NNN Realty maintains that its Guaranty obligation exists only for
events in which the borrowing entities act as one collective.
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                                   No. 15-20086
      That reasoning places more weight on the word “and” than it can bear.
Specifically, it overlooks that the definition of “Borrower” occurs in a sentence
in the recital: “[16 entities ‘and’ a 17th entity], each a Delaware limited liability
company (as defined in the Security Instrument), the ‘Borrower’), have
obtained a loan (the ‘Loan’)[.]” The suggestion that the parties should have
used the words “and/or” instead of “and” makes no sense in the context of the
sentence: either all 17 entities obtained a loan or they did not. That is, the
recital states a fact—each of the 17 entities is a party to the loan. There would
be no reason for the parties to write that “16 entities and/or a 17th entity have
obtained a loan,” when in fact all 17 entities obtained the loan. The centerpiece
of the district court’s and NNN Realty’s reasoning, therefore, is unsound and
not dispositive.
      2. What “as Defined in the Security Instrument” Modifies
      Having eliminated NNN Realty’s sole argument for why “Borrower”
must refer to the collective body of borrowing entities, we consider next
WBCMT’s argument to the contrary. In light of the extraneous or missing
parenthesis in the Guaranty’s recital, WBCMT invokes the well-established
rule that “[t]he words, not the punctuation, are the controlling guide in
construing a contract.”       Anderson & Kerr Drilling Co. v. Bruhlmeyer,
136 S.W.2d 800, 803 (Tex. 1940). “If the meaning of the words is clear[,] the
court will interpret a contract according to their meaning and without regard
to the punctuation marks or the want of them.”            Id.    Applying this rule,
WBCMT contends that the Guaranty clearly incorporates the Security
Instrument’s definition of “Borrower,” which speaks in terms of the borrowing
entities “individually or collectively as the context may require.” A comparison
of the two definitions (with emphases added) appears below:




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                                   No. 15-20086


               Guaranty                                    Security Instrument
WHEREAS, NNN Cypresswood Drive, LLC,             THIS DEED OF TRUST, SECURITY
NNN Cypresswood Drive 1, LLC, NNN                AGREEMENT AND FIXTURE FILING
Cypresswood    Drive    3,  LLC, NNN             (as the same may from time to time be
Cypresswood    Drive    4,  LLC, NNN             amended,       consolidated,    renewed    or
Cypresswood    Drive    5,  LLC, NNN             replaced, this “Deed of Trust”) is made as
Cypresswood    Drive    6,  LLC, NNN             of June 20, 2007, by NNN CYPRESSWOOD
Cypresswood    Drive    7,  LLC, NNN             DRIVE, LLC, a Delaware limited liability
Cypresswood    Drive    9,  LLC, NNN             company (“Initial Borrower”) and by NNN
Cypresswood Drive 10, LLC, NNN                   CYPRESSWOOD DRIVE 1, LLC, NNN
Cypresswood Drive 11, LLC, NNN                   CYPRESSWOOD DRIVE 3, LLC, NNN
Cypresswood Drive 12, LLC, NNN                   CYPRESSWOOD DRIVE 4, LLC, NNN
Cypresswood Drive 13, LLC, NNN                   CYPRESSWOOD DRIVE 5, LLC, NNN
Cypresswood Drive 14, LLC, NNN                   CYPRESSWOOD DRIVE 6, LLC, NNN
Cypresswood Drive 17, LLC, NNN                   CYPRESSWOOD DRIVE 7, LLC, NNN
Cypresswood Drive 18, LLC, NNN                   CYPRESSWOOD DRIVE 9, LLC, NNN
Cypresswood Drive 19, LLC, and NNN               CYPRESSWOOD DRIVE 10, LLC, NNN
Cypresswood Drive 20, LLC, each a                CYPRESSWOOD DRIVE 11, LLC, NNN
Delaware limited liability company (as           CYPRESSWOOD DRIVE 12, LLC, NNN
defined in the Security Instrument),             CYPRESSWOOD DRIVE 13, LLC, NNN
the “Borrower”), have obtained a loan (the       CYPRESSWOOD DRIVE 14, LLC, NNN
“Loan”) in the principal amount of               CYPRESSWOOD DRIVE 17, LLC, NNN
Seventeen Million Five Hundred Thousand          CYPRESSWOOD DRIVE 18, LLC, NNN
and No/100 Dollars ($17,500,000.00) from         CYPRESSWOOD DRIVE 19, LLC, NNN
[Wachovia Bank.]                                 CYPRESSWOOD DRIVE 20, LLC, each a
                                                 Delaware       limited   liability   company
                                                 (collectively, together with Initial Borrower
                                                 and each Co-Owner Transferee (as
                                                 hereinafter defined) acquiring an interest in
                                                 the Property (as hereinafter defined) in
                                                 accordance with the terms hereof,
                                                 individually or collectively as the
                                                 context may require, “Borrower”)[.]
                                                 …

                                                 6.36 Borrower References. Wherever the
                                                 defined    term     “Borrower”      is   used
                                                 throughout this Deed of Trust, such term
                                                 shall be read to include each entity
                                                 comprising        Borrower        and      the
                                                 representation,      covenant,      condition,
                                                 requirement or provision relating thereto
                                                 shall be applicable to each entity comprising
                                                 Borrower.



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                                  No. 15-20086
WBCMT urges that, read plainly, the Guaranty’s parenthetical “as defined in
the Security Instrument” incorporates the Security Instrument’s definition,
which describes the borrowing entities “individually or collectively” as
“Borrower.”
       We agree with WBCMT. The recital supplies only three possible objects
of the clause “as defined in the Security Instrument”: (1) the list of borrowing
entities; (2) “Delaware limited liability company”; or (3) “Borrower.” As the
district court correctly noted, the second option is ruled out because “Delaware
limited liability company” is not “defined” in the Security Instrument. Both
the first and third options, however, can reasonably be read in light of the
Security Instrument’s definition of “Borrower.”          That is, the Security
Instrument twice defines “Borrower” as the borrowing entities “individually or
collectively as the context may require,” and it applies every covenant,
condition and requirement of the Security Instrument to both the collective
and the individual entities. The district court’s interpretation of the clause
rendered it meaningless and overemphasized the importance of the misplaced
or superfluous parenthesis.      WBCMT’s interpretation better fulfills the
requirements of Texas law, as it gives effect to the clause and looks at the words
where punctuation is uncertain. We conclude that the Guaranty incorporates
the Security Instrument’s definition of “Borrower,” which unambiguously
includes each borrowing entity individually as well as collectively.
      3. The Guaranty’s Context
      This reading of the Guaranty’s recital is reinforced by a survey of the
Guaranty’s provisions, many of which would be rendered meaningless by NNN
Realty’s theory that “Borrower” refers exclusively to all borrowing entities
collectively.   Our task is to “examine the entire contract in an effort to
harmonize and give effect to all provisions so that none is rendered
meaningless.” Weeks Marine, Inc., 737 F.3d at 369; Coker, 650 S.W.2d at 393.
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See also Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation
of Legal Texts 167, 174 (2012) (stating that “[t]he text must be construed as a
whole,” and “[i]f possible, every word and every provision is to be given effect”).
So considered, various provisions of the Guaranty indicate that “Borrower”
must refer to the borrowing entities individually or collectively.
      To begin, the phrase “Borrower or any other person” and slight
variations thereof appear 15 times in the Guaranty. A “person” is defined as
“a human being,” or in the artificial sense, “[a]n entity, such as a corporation,
created by law and given certain legal rights and duties of a human being.”
Person, Black’s Law Dictionary (10th ed. 2014). This repeated phrase in the
Guaranty thus translates to “Borrower or any other [human being or entity].”
But in order for there to be any other human being or entity, there must first
be a human being or entity. That is, the “Borrower” must itself be a human
being or entity. In this transaction, by its own terms, the borrowing entities
taken together are not an artificial legal “person.” NNN Realty acknowledges
this fact: they are “a number of individual investors that each formed separate
limited liability companies” (emphasis added). Although each borrowing entity
is an autonomous owner of a tenant-in-common interest, they do not comprise
a single entity. Thus, if we adopted NNN Realty’s interpretation of “Borrower”
as all borrowing entities collectively, it would effectively render nonsensical
the phrase “Borrower or any other person” because the collective “Borrower” in
the structure of this transaction is not a “person.”
      A second example arises with regard to the Guaranty’s use of entity-
specific language. For example, section 1 of the Guaranty defines the scope of
NNN Realty’s obligations to guarantee or indemnify the lender. Sections 1(f)
and 1(h) refer to “Borrower or any of its principals, officers, general partners
or members[.]” And the penultimate paragraph in section 1 refers to “Borrower
. . . or any general partner, manager or managing member of Borrower[.]”
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Terms like “principal,” “officer,” “general partner,” and “member” are all entity-
specific terms of art that relate to legal “persons.” Yet, as explained above, it
is undisputed that the individual investor entities in this transaction
disclaimed the formation of any collective entity or “person.” Accepting NNN
Realty’s interpretation of “Borrower” as only the borrowing entities collectively
would thus render meaningless the Guaranty’s expansive references to
principals, officers, general partners or members. Applied to each investor
individually, “as the context may require,” however, the references make
perfect sense and expand NNN Realty’s obligations. At oral argument, NNN
Realty dismissed the references to these terms as mere “boilerplate language.”
But courts are not entitled to disregard boilerplate language as such. Our task
is to give effect “to all provisions,” boilerplate or not. Weeks Marine, Inc.,
737 F.3d at 369 (emphasis added).
      In regard to the scope of the indemnity, NNN Realty assumes
responsibility in section 1(j) for “Costs” arising from “Borrower’s failure to
comply with the Securities Act (as defined in the Security Instrument) and all
applicable state securities laws[.]” If “Borrower” means only the collective
entities, then any individual entity investor’s failure to comply with applicable
securities laws in a transfer of its tenant-in-common interest in the Property
is excluded from NNN Realty’s guaranty. Put otherwise, NNN Realty would
indemnify the Lender only in the nonsensical and unlikely event that all of the
entities comprising Borrower were involved in securities law violations.
Reading “Borrower” to include the entities individually and collectively accords
with the transaction’s legal structure.
      Particularly relevant to this dispute is the language outlining NNN
Realty’s obligation as indemnitor to “be fully liable for all principal, interest
and other amounts which may be due and owing by Borrower . . . after . . .
(ii) the Property or any part thereof becom[es] an asset in (x) a voluntary
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                                   No. 15-20086
bankruptcy or insolvency proceeding of Borrower[.]” WBCMT argues that if
NNN Realty correctly defines Borrower as a collective entity, then filing “any
part” of the Property as an asset in bankruptcy is rendered meaningless,
because the only bankruptcy covered by the indemnity would be that of the
collective Borrower for all of the Property. On the other hand, if an individual
borrowing entity is within the “Borrower” definition, and that entity sought
bankruptcy relief, as happened here, then its tenant-in-common interest in
“any part” of the Property became an asset of the estate. WBCMT’s
interpretation gives meaning to the entirety of the language in this provision.
NNN Realty’s only response is to dismiss “any part thereof” as “boilerplate,”
which, as already noted, this court may not do.
      A further objection to limiting “Borrower” to the collective group of
entities is a serious doubt whether they could, as a collective, file the “Property”
in a bankruptcy case. The Bankruptcy Code defines a “debtor” as a “person”
“concerning which a case under this title has been commenced,” and a “person”
includes an “individual, partnership, and corporation[.]” 11 U.S.C. § 101(13),
(41). Only a “person” (that resides in the United States) may be a debtor under
Title 11. Id. § 109(a). The Code permits neither a “property” nor, apparently,
a group of individuals who happen to be tenants in common to be a “debtor”
entitled to the protection of federal bankruptcy law.         That the individual
investor entities could do so, however, is beyond dispute. In this instance,
interpreting “Borrower” to include a collective or individual entities is the only
way to effectuate the provision.
       Tension also arises between NNN Realty’s definition of “Borrower” and
the use of the term in the same provision just discussed, which also holds NNN
Realty “fully liable” for the debt “from and after (i) a default by Borrower . . . of
any of the covenants set forth in Section 2.9, Section 2.29, or Section 2.34 of
the Security Instrument.” “Borrower” includes both the collective entities and
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                                 No. 15-20086
the entities individually under the Security Instrument. These sections of the
Security Instrument treat, respectively and generally speaking, transfers or
alienations of interest in the Property (2.9), maintaining the status of a single
purpose entity (2.29), and preserving intact the tenant in common agreement
underlying the transaction (2.34). In each section, it is clear that individual
entities as “Borrowers” may commit a breach as well as the collective group. If
NNN Realty’s narrower interpretation of “Borrower” prevails, then a serious
question would arise whether “Borrower” in this provision is defined under the
Security Instrument or the Guaranty.          Using the consistent definition
indicated by the Guaranty recital’s reference to the Security Instrument
definition eliminates this problem.
      Another example lies in section 6(c), in which NNN Realty purportedly
waives “any right of subrogation, contribution, reimbursement or indemnity
whatsoever or any right of recourse to or with respect to the assets or property
of Borrower.”    Under NNN Realty’s interpretation, NNN Realty could
nevertheless pursue against any individual borrowing entity (or even many of
them) “any right of subrogation, contribution, reimbursement or indemnity
whatsoever or any right of recourse to or with respect to the assets or property
of” such entity to satisfy NNN Realty’s indemnity obligations. This result
would follow even though NNN Realty waived such rights against the
collective “Borrower.”
      In each of these examples, however, reading “Borrower” as referring to
each borrowing entity individually or collectively, according to the context,
solves obvious interpretive problems that arise from NNN Realty’s narrower
construction of the term. Interpreting “Borrower” to incorporate the Security




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    Case: 15-20086        Document: 00513810814          Page: 15      Date Filed: 12/22/2016



                                        No. 15-20086
Instrument’s definition makes use of and makes sense of the Guaranty as a
whole. 2
       For these reasons, NNN Realty’s interpretation of “Borrower” as limited
to all borrowing entities collectively creates various absurdities throughout the
Guaranty—so much so that the interpretation cannot be considered a
reasonable alternative interpretation of “Borrower.” 3 The only reasonable,
textually supportable interpretation of “Borrower” is that it refers to the
collective entities or to each individual borrowing entity, as the context may
require. “Borrower” is unambiguous as a matter of law in the Guaranty.
       We REVERSE and RENDER judgment for WBCMT.




       2   On this note, the parties to the Security Instrument addressed the potential situation
where there are inconsistencies between the Security Instrument and the Guaranty and
prescribed that “the provisions of [the Security Instrument] shall control over the provisions
of . . . the Indemnity and Guaranty Agreement[.]” This means that the Security Instrument’s
definition of “Borrower” should supersede any inconsistent definitions elsewhere in the loan
documents. Of course, NNN Realty was not a party to the Security Instrument, but NNN
Realty did agree in the Guaranty that the Guaranty and other loan documents (including the
Security Instrument) “embod[ied] the final entire agreement among the parties hereto[.]”
NNN Realty’s endeavor here to devise inconsistent definitions of “Borrower” thus not only
has no basis in the Guaranty’s text, but it also attempts to walk back NNN Realty’s assent
to the Security Instrument’s explicit guidance on how to resolve inconsistencies.
       3 NNN Realty’s only other affirmative argument is that the Guaranty should be
understood as “limited,” “narrower in scope,” and “not necessarily . . . as inclusive as the
Security Instrument.” But that argument fails to address the interpretational conundrums
that NNN Realty’s interpretation of “Borrower” would create in various provisions of the
Guaranty referenced above. We find this argument unpersuasive.
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