The question in Haggard v. Bank of the Ozarks was whether a guarantor’s liability was limited under Texas law to the last $500,000 due on the note of the principal obligor. (No 11-10154, Jan. 19, 2012). Comparing language in the guaranty which limited liability “to the last to be repaid $500,000, of the principal balance of the loan,” with other terms that excused the creditor bank from first trying to collect from the principal, the Court found the guaranty ambiguous and reversed a summary judgment for the bank. Op. at 7, 8. (citing, as to the limitation language, NH Properties v. Mittleider, 267 F. App’x 375 (5th Cir. 2008)). The Court reminded that a “guaranty agreement is construed strictly in favor of the guarantor,” so “[i]f the guaranty is ambiguous, then the court must apply the ‘construction which is most favorable to the guarantor.'” Op. at 8.
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