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Harman v. McAfee

The plaintiff only had to show that she had a viable, colorable claim with regard to the defendant's promissory note guaranty to be entitled to an exception from discharge in the defendant's bankruptcy case.

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Joseph Harman appeals from the trial court’s order denying his motion for summary judgment and granting Carolyn McAfee’s motion for summary judgment on her claims under a conditional guaranty and for attorney fees and expenses of litigation. Finding no error, we affirm. This case arose after James McAfee loaned Carter Oaks Crossing $400,000 to refinance a mortgage. Joseph Harman, as president of Carter Oaks, signed a promissory note providing that Carter Oaks would repay the amount to McAfee plus 25 percent interest in semi-annual installments beginning June 30, 1999, and ending December 31, 2005.

The note required that all net cash flow be applied to make the semi-annual payments to McAfee until the note was paid in full. Harman testified at his deposition that this meant that McAfee was to be paid before Harman or any of the other partners in Carter Oaks were repaid. Harman also signed a Conditional Guaranty of the note, guaranteeing payment in the event of “any act of conversion, misappropriation, theft or embezzlement with respect to any money or other property of Maker by the undersigned in his capacity as an employee, officer, director, agent or employees of Maker.”

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