Contract Law - Personal Guarantee Enforced Because of Admissions By Defendant

NISSAN MOTOR ACCEPTANCE CORPORATION v. ABBAS HOLDING I, INC., Ill: Appellate Court, 1st Dist., 2nd Div. 2012 - Google Scholar:


The main issue in this case was whether the trial court properly ruled that an individual defendant, Joseph Abbas, was liable on a personal guaranty. The original document with Mr. Abbas' signature was lost. The court initially ruled in his favor. Upon reconsideration, the court ruled that the personal guaranty was binding on Abbas because he admitted in a verified answer that he signed it.

The admission in a verified answer was a binding judicial admission and was fatal to the defense of the personal guaranty claim. The analysis is worthy of quotation:

"¶ 19 Section 2-610 of the Code provides that every answer and subsequent pleading "shall contain an explicit admission or denial of each allegation of the pleading to which it relates," and that "[e]very allegation, except allegations of damages, not explicitly denied is admitted, unless the party states in his or her pleading that he or she has no knowledge thereof sufficient to form a belief, and attaches an affidavit of the truth of the statement of want of knowledge." (Emphasis added.) 735 ILCS 5/2-610(a), (b) (West 2010). "Any admission contained in the original verified pleading, which is not the product of mistake or inadvertence, is a binding judicial admission." Arpac Corp. v. Murray, 226 Ill. App. 3d 65, 80, 589 N.E.2d 640, 652 (1992). Such an admission "has the effect of withdrawing a fact from issue and dispensing wholly with the need for proof of the fact." Id. at 80-81, 589 N.E.2d at 652; Beverly Bank v. Coleman Air Transport, 134 Ill. App. 3d 699, 703, 481 N.E.2d 54, 57 (1985). A judicial admission in a verified pleading "makes it unnecessary for the opposing party to introduce evidence in support thereof." L.D.S., LLC v. Southern Cross Food, Ltd., 2011 IL App (1st) 102379, ¶ 35.

¶ 20 Paragraphs 22 and 23 of Nissan's first amended complaint pertained to its claim that Joseph breached the guaranty agreement (count III). As discussed, paragraph 22 alleged that "[o]n or about February 26, 2007, [Joseph] made, signed, and delivered to [Nissan] a certain Continuing Guaranty Agreement (`Guaranty') in writing, whereby he promised and agreed promptly to pay any and all liabilities of [Abbas Holding] to [Nissan] then existing or due or to be incurred or become due." In Abbas Holding and Joseph's verified answer, Joseph "denies the allegations contained within [p]aragraph 22 of [Nissan's] First Amended Complaint, except the allegation that on or about February 26, 2007, he made, signed, and delivered to [Nissan] a certain Continuing GuarantyAgreement (`Guaranty') in writing, subject to the production and examination of the original document." (Emphasis added.) Paragraph 23 of Nissan's first amended complaint alleged that the guaranty agreement "was continuing, absolute, and unconditional, including all costs and expenses in enforcing the Guaranty. (A copy of the Guaranty is attached hereto as Exhibit D.)" In Abbas Holding and Joseph's verified answer, Joseph "denies the allegations contained within [p]aragraph 23 of [Nissan's] First Amended Complaint, except the allegation that [Nissan] has attached a copy of theGuaranty as Exhibit D." (Emphasis added.)

¶ 21 We find that the italicized and "excepted" portions of Joseph's answers were not explicit denials of the allegations under section 2-610 of the Code and, thus, constituted admissions that Joseph had signed and delivered the guaranty agreement to Nissan and that a copy of the guaranty agreement was attached to Nissan's first amended complaint as an exhibit. Because Abbas Holding and Joseph do not argue that these admissions in the verified answer were the product of mistake or inadvertence, we find them to be binding judicial admissions which had "the effect of discharging the need for any further proof" to prove the existence of the guaranty agreement, as the trial court correctly noted in its April 12, 2011 ruling which granted Nissan's motion to reconsider. Accordingly, Nissan was not required to produce the original guaranty agreement at trial under the best evidence rule, and Joseph's answer to the allegations under paragraph 22 that his admission was made "subject to the production and examination of the original document" had absolutely no legal effect upon Nissan. See Beverly Bank,134 Ill. App. 3d at 704, 481 N.E.2d at 57 (holding that personal guarantor's verified answer admitting plaintiff's allegations that a guaranty had been signed and delivered constituted a binding admission against personal guarantor); see generally In re Estate of Weiland, 338 Ill. App. 3d 585, 604, 788 N.E.2d 811, 827 (2003) (best evidence rule requires the existence of a contract or other writing to be proven by the original writing unless it is shown that the original was lost, destroyed, or otherwise unavailable)."


Comment: it is important to carefully consider any answer to any pleading. An answer that admits a paragraph of a verified complaint should usually be binding on the person making the admission, especially here where sophisticated people borrowed money from a finance company. This is a good decision.


Edward X. Clinton, Jr.

www.clintonlaw.net

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