MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                             FILED
regarded as precedent or cited before any                                    Sep 26 2017, 8:11 am
court except for the purpose of establishing
                                                                                  CLERK
the defense of res judicata, collateral                                       Indiana Supreme Court
                                                                                 Court of Appeals
estoppel, or the law of the case.                                                  and Tax Court




ATTORNEY FOR APPELLANT                                       ATTORNEY FOR APPELLEE
Abraham Murphy                                               JAMES E. CHALFANT
Abraham Murphy Attorney at Law,                              Jennifer L. Graham
LLC                                                          Indianapolis, Indiana
Indianapolis, Indiana



                                              IN THE
     COURT OF APPEALS OF INDIANA

Michael Fish,                                                September 26, 2017
Appellant-Plaintiff,                                         Court of Appeals Case No.
                                                             49A02-1702-MF-213
         v.                                                  Appeal from the Marion Superior
                                                             Court
2444 Acquisitions, LLC; El Sol                               The Honorable Michael D. Keele,
Also Rises, Inc.; El Sol De Tala,                            Judge
Inc.; Viva Management Services,                              Trial Court Cause No.
Inc.; Quality Leasing Company;                               49D07-1103-MF-10806
Ruben Pazmino; Javier
Amezcua; and James E.
Chalfant,1



1
  Although the instant appeal only concerns Appellant-Plaintiff Michael Fish’s claims that relate to Appellee-
Defendant James E. Chalfant, we nonetheless include all of the parties included in Fish’s original complaint
in this caption because a party below is a party on appeal. See Appellate Rule 17(A) (providing that “[a]
party of record in the trial court … shall be a party on appeal”).

Court of Appeals of Indiana | Memorandum Decision 49A02-1702-MF-213 | September 26, 2017              Page 1 of 13
      Appellees-Defendants.




      Bradford, Judge.



                                          Case Summary
[1]   In August of 2007, Appellant-Plaintiff Michael Fish executed a Secured

      Promissory Note with 2444 Acquisitions, LLC (“the 2007 Note”). Under the

      terms of the 2007 Note, Fish agreed to loan 2444 Acquisitions the sum of

      $220,000.00 and 2444 Acquisitions agreed to repay the loan in a single lump

      sum payment on or before September 14, 2017. Appellee-Defendant James E.

      Chalfant personally guaranteed repayment of the 2007 Note. In November of

      2008, Fish executed a second Secured Promissory Note with 2444 Acquisitions

      (“the 2008 Note”). Under the terms of the 2008 Note, Fish agreed to lend 2444

      Acquisitions the sum of $220,976.68, with interest. The terms of the 2008 Note

      indicated that the loan was to be repaid by monthly installments over a term of

      approximately three years with a final balloon payment due on December 1,

      2011.




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[2]   Fish subsequently alleged that 2444 Acquisitions failed to repay the funds

      associated with the 2008 Note according to the Note’s terms. In filing the

      underlying lawsuit, Fish claimed that Chalfant’s guaranty of the 2007 Note also

      applies to the 2008 Note. The trial court found otherwise, and granted

      summary judgment in favor of Chalfant. Because we agree with the trial court,

      we affirm.



                            Facts and Procedural History
[3]   In August of 2007, Chalfant, on behalf of and in his position as a Managing

      Member of 2444 Acquisitions, executed the 2007 Note with Fish. Pursuant to

      the terms of the 2007 Note, Fish agreed to lend 2444 Acquisitions the sum of

      $220,000.00. Also pursuant to the terms of the 2007 Note, 2444 Acquisitions

      agreed to pay back the $220,000.00 in a single lump sum payment “on or before

      September 14, 2007.” Appellant’s App. Vol. II, p. 36. The terms of the 2007

      Note did not include any express conditions as to interest.


[4]   On August 3, 2007, Chalfant signed a Guaranty of Payment (“the Guaranty”)

      in which he personally guaranteed “the full and prompt payment to [Fish] of

      that certain Secured Promissory Note of Two Hundred Twenty Thousand

      Dollars, made by [2444 Acquisitions] in favor of [Fish].” Appellant’s App. Vol.

      II, p. 39. The terms of the Guaranty indicated that it “shall remain in full force

      and effect until any and all indebtedness due [Fish] has been fully paid.”

      Appellant’s App. Vol. II, p. 36. The terms of the Guaranty also indicated that it



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      was to be “construed according to the law of the State of Indiana.” Appellant’s

      App. Vol. II, p. 40.


[5]   On November 25, 2008, Chalfant, again on behalf of and in his position as a

      Managing Member of 2444 Acquisitions, executed the 2008 Note with Fish.

      Pursuant to the terms of the 2008 Note, Fish agreed to lend 2444 Acquisitions

      the sum of $220,976.68, “with interest at the rate of 12.2314 percent per

      annum.” Appellant’s App. Vol. II, p. 58. The loan was to be repaid


              in equal monthly installment[s] of $3,200.00 commencing on
              December 1, 2008 and continuing thereafter until November 1,
              2011. A balloon payment of the then outstanding principal shall
              be due on December 1, 2011, less a credit equal to the difference
              between the interest that has accrued under this Note and the
              amount of interest that would have accrued if interest is
              calculated at the rate of 10 percent per annum.


      Appellant’s App. Vol. II, p. 58. Chalfant did not execute a new Guaranty at the

      time the 2008 Note was executed.


[6]   On March 18, 2011, Fish filed a complaint in the trial court, alleging a number

      of counts against a number of parties. With regard to Chalfant, Fish alleged

      that Chalfant breached his Guaranty because his Guaranty extended to cover

      the funds loaned to 2444 Acquisitions in connection to the 2008 Note. On

      August 23, 2016, Fish filed a motion for summary judgment which related only

      to his claim against Chalfant. On November 16, 2016, Chalfant filed a cross-

      motion for summary judgment. Fish responded to Chalfant’s motion on

      December 12, 2016.

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[7]   The trial court conducted a hearing on the parties’ competing summary

      judgment motions on December 14, 2016. At the conclusion of the hearing, the

      trial court took the matter under advisement. On January 3, 2017, the trial

      court issued an order granting summary judgment in favor of Chalfant. This

      appeal follows.



                                 Discussion and Decision
[8]   Fish contends that the trial court erred in granting summary judgment in favor

      of Chalfant. We disagree.


                                     I. Standard of Review
[9]   Pursuant to Rule 56(C) of the Indiana Rules of Trial Procedure, summary

      judgment is appropriate when there are no genuine issues of material fact and

      when the moving party is entitled to judgment as a matter of law. Heritage Dev.

      of Ind., Inc. v. Opportunity Options, Inc., 773 N.E.2d 881, 887 (Ind. Ct. App.

      2002).

               “On appeal from the denial of a motion for summary judgment,
               we apply the same standard applicable in the trial court.
               Summary judgment is appropriate only if there is no genuine
               issue as to any material fact and the moving party is entitled to
               judgment as a matter of law. Ind. Trial Rule 56(C). We
               therefore must determine whether the record reveals a genuine
               issue of material fact and whether the trial court correctly applied
               the law. A genuine issue of material fact exists where facts
               concerning an issue, which would dispose of the litigation are in
               dispute, or where the undisputed material facts are capable of
               supporting conflicting inferences on such an issue. If the material

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        facts are not in dispute, our review is limited to determining
        whether the trial court correctly applied the law to the undisputed
        facts. When there are no disputed facts with regard to a motion
        for summary judgment and the question presented is a pure
        question of law, we review the matter de novo.”



Clary v. Lite Machines Corp., 850 N.E.2d 423, 430 (Ind. Ct. App. 2006) (quoting

Bd. of Tr. of Ball State Univ. v. Strain, 771 N.E.2d 78, 81-82 (Ind. Ct. App. 2002)

(internal quotation marks and some citations omitted)).


        A party seeking summary judgment bears the burden to make a
        prima facie showing that there are no genuine issues of material
        fact and that the party is entitled to judgment as a matter of law.
        American Management, Inc. v. MIF Realty, L.P., 666 N.E.2d 424,
        428 (Ind. Ct. App. 1996). Once the moving party satisfies this
        burden through evidence designated to the trial court pursuant to
        Trial Rule 56, the non-moving party may not rest on its
        pleadings, but must designate specific facts demonstrating the
        existence of a genuine issue for trial. Id.



Heritage Dev., 773 N.E.2d at 888 (emphasis added). “On appeal, the trial court’s

order granting or denying a motion for summary judgment is cloaked with a

presumption of validity.” Van Kirk v. Miller, 869 N.E.2d 534, 540 (Ind. Ct.

App. 2007), trans. denied. However, we are not limited to reviewing the trial

court’s reasons for granting or denying summary judgment but rather may

affirm the trial court’s ruling if it is sustainable on any theory found in the

evidence designated to the trial court. See Alva Elec., Inc. v. Evansville-




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       Vanderburgh Sch. Corp., 7 N.E.3d 263, 267 (Ind. 2014) (citing Wagner v. Yates,

       912 N.E.2d 805, 811 (Ind. 2009)).


[10]   Further, “[t]he fact that the parties made cross motions for summary judgment

       does not alter our standard of review. MacGill v. Reid, 850 N.E.2d 926, 928-29

       (Ind. Ct. App. 2006) (citing Hartford Acc. & Indem. Co. v. Dana Corp., 690 N.E.2d

       285, 291 (Ind. Ct. App. 1997), trans. denied). “When considering cross motions

       for summary judgment, we consider each motion separately, construing the

       facts most favorably to the non-moving party in each instance and determine

       whether the moving party is entitled to judgment as a matter of law.” Id. at 929

       (citing Hartford, 690 N.E.2d at 291).


                  II. Overview of Law Relating to a Guaranty
[11]   In S-Mart, Inc. v. Sweetwater Coffee Co., Ltd., 744 N.E.2d 580 (Ind. Ct. App.

       2001), we set forth a detailed recitation of the law relating to a guaranty. In

       doing so, we stated the following:

               A guaranty is defined as “a promise to answer for the debt,
               default, or miscarriage of another person.” 38 AM. JUR. 2d
               Guaranty § 1 (1999). It “is an agreement collateral to the debt
               itself” and represents a “conditional promise” whereby the
               guarantor promises to pay only if the principal debtor fails to pay.
               Id. Under Indiana law, three parties are required to execute a
               guaranty agreement: the obligor or principal debtor, the obligee
               or creditor, and the guarantor or surety. [Kordick v. Merchants
               Nat’l Bank & Trust Co. of Indpls., 496 N.E.2d 119, 124 (Ind. Ct.
               App. 1986)]. A continuing guaranty is defined as a guaranty
               that:


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                “contemplates a future course of dealing
                encompassing a series of transactions.... [A] contract
                is continuing if it contemplates a future course of
                dealing during an indefinite period, or if it is intended
                to cover a series of transactions or succession of
                credits, or if its purpose is to give to the principal
                debtor a standing credit to be used by him from time
                to time. A continuing guaranty covers all
                transactions, including those arising in the future,
                which are within the contemplation of the
                agreement.”

        38 AM. JUR. 2d Guaranty § 20 (1999) (emphasis added); see also
        Vidimos, Inc. v. Vidimos, 456 N.E.2d 455, 458 (Ind. Ct. App. 1983)
        (“continuing guaranty is not limited to single transaction, but
        contemplates a future course of dealing encompassing a series of
        transactions”). Moreover, a continuing guaranty “is not limited
        in time or amount and is operative until revoked.” 49 AM. JUR.
        2d Landlord and Tenant § 819 (1995).

        The rules governing the interpretation and construction of
        contracts generally apply to the interpretation and construction of
        a guaranty contract. [Kordick, 496 N.E.2d at 123]. The extent of
        a guarantor’s liability is determined by the terms of his or her
        contract. Id. The terms of a guaranty should neither be so
        narrowly interpreted as to frustrate the obvious intent of the
        parties, nor so loosely interpreted as to relieve the guarantor of a
        liability fairly within its terms. Id. The contract of a guarantor is
        to be construed based upon the intent of the parties, which is
        ascertained from the instrument itself read in light of the
        surrounding circumstances. Skrypek v. St. Joseph Valley Bank, 469
        N.E.2d 774, 776 (Ind. Ct. App. 1984); Orange-Co., Inc. v. Brown,
        181 Ind. App. 536, 393 N.E.2d 192, 195 (1979).

        A guarantor’s liability will not be extended by implication
        beyond the terms of his or her contract. Goeke v. Merchants Nat’l
        Bank & Trust Co. of Indianapolis, 467 N.E.2d 760, 765 (Ind. Ct.

Court of Appeals of Indiana | Memorandum Decision 49A02-1702-MF-213 | September 26, 2017   Page 8 of 13
        App. 1984), trans. denied (1985). “A guarantor is a favorite in the
        law and is not bound beyond the strict terms of the engagement.
        Moreover, a guaranty of a particular debt does not extend to
        other indebtedness not within the manifest intention of the
        parties.” Id.

        Under Indiana common-law principles, when parties cause a
        material alteration of an underlying obligation without the
        consent of the guarantor, the guarantor is discharged from further
        liability whether the change is to his or her injury or benefit.
        Goeke, 467 N.E.2d at 765. In Yin v. Society Nat’l Bank Indiana, 665
        N.E.2d 58, 64 (Ind. Ct. App. 1996), trans. denied (1997), the court
        summarized the following rules relating to material alteration of
        a guaranty:

                “‘Guarantors and sureties are exonerated if the
                creditor by any act, done without their consent, alters
                the obligation of the principal in any respect or
                impairs or suspends the remedy for its enforcement.’
                Farmers Loan & Trust Co. v. Letsinger, 652 N.E.2d 63,
                66 [(Ind. 1995)] (quoting Weed Sewing Machine Co. v.
                Winchel, 107 Ind. 260, 7 N.E. 881 (1886)); see also 2
                WHITE & SUMMERS, § 16-10 at 106 (‘The law has
                traditionally held that conduct by the creditor which
                increases the surety’s risk discharges the surety or
                reduces the surety’s obligation pro rata.’). Moreover,
                when the principal and obligee cause a material
                alteration of the underlying obligation without the
                consent of the guarantor, the guarantor is discharged
                from further liability. Cunningham v. Mid State Bank,
                544 N.E.2d 530, 534 (Ind. Ct. App. 1989), reh. denied,
                trans. denied; Merchants Nat’l Bank and Trust Co. v.
                Lewark, 503 N.E.2d 415, 416 (Ind. Ct. App. 1987),
                reh. denied, trans. denied. A material alteration which
                will effect a discharge of the guarantor must be a
                change which alters the legal identity of the
                principal’s contract, substantially increases the risk of

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                       loss to the guarantor, or places the guarantor in a
                       different position. Cunningham, 544 N.E.2d at 534.
                       The change must be binding. Houin v. Bremen State
                       Bank, 495 N.E.2d 753, 759 (Ind. Ct. App. 1986).”

               Furthermore, 49 AM. JUR. 2d Landlord and Tenant § 822 (1995)
               (emphasis added) states that:

                       “A material alteration or departure from the contract
                       of guaranty of a lease, without the guarantor’s
                       consent, will discharge the guarantor, whether or not
                       the guarantor is prejudiced thereby. The guarantor and
                       the surety have a right to stand upon the terms of the
                       contract, and if they do not assent to any variation of it, and
                       a material variation is made, it is fatal to recovery against
                       them. This rule is fully applicable to sureties on leases.

                       A material alteration of a lease within the meaning of
                       such rule occurs where an agreement is made
                       between the lessor and lessee changing the terms of
                       the lease, or the time for the payment or rent, or in
                       some cases the amount of the rent payable.”



       S-Mart, 744 N.E.2d at 585-86 (emphasis in original).

                                              III. Analysis
[12]   In Keesling v. T.E.K. Partners, LLC, 861 N.E.2d 1246, 1253 (Ind. Ct. App. 2007),

       the trial court found that a second note, which was executed without the notice




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       and consent of one of the accommodation parties 2, “was merely given to

       evidence the current amount of monies then due and owing under the original

       note and extend the due date for payment of the original note.” (internal record

       quotation omitted). On review, we concluded otherwise. Id. at 1253-55.

       Specifically, we found that the terms of the second note capitalized interest due

       on the original note and converted it to principal in the second note. Id. at

       1253-54. The second note also increased the principal draws beyond the

       amount that was contemplated by the original note. Id. at 1254. By increasing

       the principal and potential liability beyond that which was original

       contemplated by the accommodation parties, the second note increased the

       guarantor’s potential liability. As such, we concluded that that the terms of the

       second note constituted a material alteration of the original obligation. Id. at

       1254-55.


[13]   Like in Keesling, the 2008 Note was not merely an extension of the 2007 Note,

       but rather constituted a material alteration of the 2007 Note. Pursuant to the

       terms of the 2007 Note, Fish agreed to lend 2444 Acquisitions the sum of

       $220,000.00. Also pursuant to the terms of the 2007 Note, 2444 Acquisitions

       agreed to pay back the $220,000.00 in a single lump sum payment “on or before

       September 14, 2007.” Appellant’s App. Vol. II, p. 36. The terms of the 2007

       Note did not include any express conditions as to interest. Pursuant to the



       2
         An accommodation party is one who signs an instrument “for the purpose of incurring liability on the
       instrument without being a direct beneficiary of the value given for the instrument[.]” See Ind. Code § 26-1-
       3.1-419.

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       terms of the 2008 Note, Fish agreed to lend 2444 Acquisitions the sum of

       $220,976.68, “with interest at the rate of 12.2314 percent per annum.”

       Appellant’s App. Vol. II, p. 58. The loan was to be repaid


               “in equal monthly installment[s] of $3,200.00 commencing on
               December 1, 2008 and continuing thereafter until November 1,
               2011. A balloon payment of the then outstanding principal shall
               be due on December 1, 2011, less a credit equal to the difference
               between the interest that has accrued under this Note and the
               amount of interest that would have accrued if interest is
               calculated at the rate of 10 percent per annum.”


       Appellant’s App. Vol. II, p. 58.


[14]   The differences between the terms of the 2007 Note and the 2008 Note

       increased potential liability by $976.68 plus annual interest in the amount of

       12.2314 percent of the outstanding balance of the loan. In addition, not only

       did the 2008 Note increase the potential liability beyond that which was

       originally contemplated by Chalfant, it also extended the time period under

       which he could potentially continue to be liable for 2444 Acquisitions’s debt.

       Under the terms of the 2007 Note, the debt was to be paid in full within

       approximately one month of the loan. Under the terms of the 2008 Note, the

       debt was not to be paid in full until December of 2011, or approximately a

       period of three years. The terms of the 2008 Note constituted a material

       alteration of the terms of the 2007 Note.


[15]   Moreover, to the extent that Fish argues that the guaranty at issue constituted a

       continuing guaranty, we reiterate that “[a] continuing guarantee encompasses

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       all transactions, including those arising in the future, that are within the

       contemplation of the agreement.” S-Mart, 744 N.E.2d at 587 (citing 38 AM.

       JUR. 2D Guaranty § 20 (1999)). However, nothing in the language of the

       Guaranty indicates that Chalfant contemplated or agreed for the Guaranty to

       apply to any future transactions which would extend his potential liability

       beyond the $220,000 that was memorialized in the Guaranty and the 2007

       Note. The Guaranty therefore, should not be read as a continuing guaranty.


[16]   For these reasons, we conclude that the trial court did not err in granting

       summary judgment in favor of Chalfant. As such, we affirm the judgment of

       the trial court.


[17]   The judgment of the trial court is affirmed.


       May, J., and Barnes, J., concur.




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