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Farr v. Rice

The defendants failed to identify any possible defense to their liability on two promissory notes or their failure to reimburse the plaintiff/guarantor for her settlement on the notes with the lender.

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Michael and Cynthia Farr appeal from the trial court’s order awarding Linda Rice $1,300,000, plus post-judgment interest, in this contract suit. Because there is no merit to the Farrs’ arguments on appeal, we affirm. The underlying facts are simple and undisputed. In 2007, the Farrs executed two promissory notes in favor of a private lender, OrbachWaters, LLC “OWA”. The principal amount of the notes totaled $1,300,000. OWA agreed to lend the Farrs the money only if Michael Farr’s stepmother, Linda Rice, personally guaranteed their obligations. Rice executed both notes as a “Contingent Guarantor,” who would be liable only if the Farrs failed to pay the notes in full when they matured on September 12, 2007. OWA then wired the proceeds of the notes to a corporation owned and operated by Michael Farr.

The Farrs failed to pay off the notes when they matured and, in fact, have failed to make any payment on the notes since September 2007. After the Farrs ignored OWA’s demand for payment on the notes, the lender filed suit against the Farrs as borrowers and Rice as a guarantor. OWA obtained a $1,908,459 judgment against Rice on November 21, 2007. In December 2007, Rice and OWA entered into a settlement agreement in which she agreed to pay OWA $1,590,000, plus interest and legal fees, to satisfy the judgment. Once Rice paid OWA in full pursuant to the agreement, OWA assigned its rights, title and interest in the notes to Rice.

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